9911796707
TMI Blog2019 (11) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... is nothing on record for us to believe that this sub rule had retrospective application. In the absence of any specific provision, fiscal statutes are only presumed to have prospective application - in respect of exemptions based on the value or quantity of clearances in a financial year sub rule (2) of Rule 11 had always provided for such reversal. The present case does not pertain to exemption based on value of clearances - the demand for reversal of the cenvat credit is without any authority of law applicable during the relevant period. After the introduction of Rule 11 (3) by Notification No.10/2007 dt 1.3.2007 the Tax Research Unit of CBEC has issued Circular No.334/1/2007-TRU dt. 28.2.2007 clarifying that it will come into effect immediately. The letter does not suggest that Rule 11 (3) was supposed to have retrospective effect. Therefore, we find that it has never been the intention to give retrospective application to Rule 11 (3). In consequence, demand on this count along with interest and penalties on this account needs to be set aside. Demand on account of transfer of cenvat credit - HELD THAT:- It is clear from the details narrated in the SCN and the impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective date of 05.01.2005 and transfer date of 01.04.2002. As per the scheme, all liabilities, debts, obligations and duties of IBMI stood transferred to IGSI with effective from the transfer date. Subsequently, IGSI have assigned, transferred, conveyed and sold certain assets to M/s.Lenovo (India) Pvt. Ltd. including manufacturing operations carried out from the said factory. 4. The Central Government issued an unconditional exemption notification No.23/2004-CE (as amended) exempting the computers manufactured by the appellant from payment of excise duty, w.e.f. 01.09.2004. On this date, the appellant had credit balance in their cenvat account. The SCN No.9/2005 dt. 04.07.2005 was issued to the appellant alleging that the availment of credit attributable to the inputs lying in stock as such or contained in the finished goods / semi-finished goods when the computers became exempt w.e.f. 09.07.2004 is irregular. 5. The notice also noted that IGSI have applied for transfer of the balance in the PLA and cenvat credit account and the factory to their name after amalgamation and have taken credit in the cenvat credit. The notice alleged that as the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cenvat credit, if any, taken by him in respect of the inputs received for use in the manufacture of final products and is lying in stock or in process or is contained in the final product lying in stock) will be applicable to the period prior to date of this notification (1.3.2007). 8. The second question is whether they are entitled to cenvat credit taken by the predecessor unit under Rule 10 CCR 2004 or such transfer is invalid in view of Rule 10 (3) of CCR 2004. 9. Elaborating first issue, Ld. counsel would submit that assessee is entitled to take cenvat credit if the final product is dutiable and not otherwise. Consequently, if the product becomes exempted unconditionally from duty assessee will not be entitled to take credit from that date. As far as credit that has already been taken, which is attributable to the inputs lying in stock or work in progress or the final products lying in stock (in respect of which, evidently no duty will be paid because of the exemption) is concerned, whether the assessee can continue to enjoy cenvat credit already taken or the same needs to be reversed is the question. He would submit that the relevant legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on any output service, whether provided in India or exported. (4) A provider of output service shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for providing the said service and is lying in stock or is contained in the taxable service pending to be provided, when he opts for exemption from payment of whole of the service tax leviable on such taxable service under a notification issued under section 93 of the Finance Act, 1994 (32 of 1994) and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export or for payment of service tax on any other output service, whether provided in India or exported. He would submit that prior to 1.3.2007, this rule had only sub rules (1) (2) which provide for reversal of cenvat credit by any manufacturer who opts for exemption from whole of duty based on notification which allows such exemption based on the value or quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business but the entire business and they operate from the same premises. It is not in dispute that all assets and liabilities have been transferred to the new entity. There is nothing on record to show that some of the inputs or capital goods have been diverted or sold outside. In fact, there is no such allegation at all. Under these circumstances, he would urge that they are squarely covered by provisions of Rule 10 (2) of CCR 2004 and are not covered by mischief of Rule 10 (3) of CCR 2004. 12. On the first question of reversal of CENVAT credit under Rule 11 (3), he relies on the case law of TAFE Ltd. Vs CCE Madurai-II - 2015 (320) ELT 357 (Mad.) affirmed by the Hon ble Supreme Court reported in 2015 (324) ELT A86 (SC). The relevant portion of the judgment of the Hon ble High Court of Madras in this case is contained in paras 17 18 which are reproduced below : 17. The introduction of Rule 11(3) of the Cenvat Credit Rules, 2004, by Notification No. 10/2007-C.E. (N.T.), dated 1-3-2007 and the Tax Research Unit Circular in D.O.F. No. 334/1/2007-TRU, dated 28-2-2007 clarifying that it will come into effect immediately, makes it clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Hon ble Supreme Court [2003 (157) ELT A81 (SC)]. Therefore, the appellant is not entitled to disputed cenvat credit. 16. Countering this argument Ld. Counsel for the appellant submits that the case of Albert David (supra) has been reckoned by the Hon ble High Court of Madras in the case of TAFE Ltd. (supra) while ruling that no cenvat credit under Rule 11 (3) needs to be reversed. This decision of the Hon ble High Court of Madras has also been upheld by the Hon ble Apex Court. 17. On the question of transfer of credit to the new entity Ld. D.R submits that sub-Rule (3) of Rule 10 is very categorical that the transfer of credit to the new entity is allowed only if the inputs as such or in process or the capital goods are also transferred along with factory or business and accounted for to the satisfaction of the Dy. Commissioner or Asst. Commissioner of Central Excise and the appellant has failed to show such transfer Therefore, appellant is not entitled to the cenvat credit of the disputed amounts. 18. We have considered the arguments on both sides and perused the records. 19. As far as the first ..... X X X X Extracts X X X X X X X X Extracts X X X X
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