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TMI Blog2023 (8) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... hip. The respondent-assessee is entitled to take transfer of Cenvat Credit available in the books of the transferor Vivin Labs, as per Rule 10 of Cenvat Credit Rules. Appeal of Revenue dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... January 2010 filed by Vivin labs was verified and a credit amounting to Rs.1,83,18,042/- (Rs.2,06,056 towards input credit and Rs.1,81,11,990 towards Capital Goods Credit) was lying in the balance. Vivin labs had taken 50% of CENVAT credit on capital goods during the period 2009-10 (upto Jan 2010), i.e., Rs. 10,55,509/-. Matrix laboratories Limited was eligible for the remaining balance of 50% of the credit of Rs. 10,55,509/- in the F.Y. 2010-11 on account of capital goods. 20.09.2010 Superintendent issued a letter to the Respondent, requiring them to furnish information/ documents regarding the nature of acquisition, agreement for transfer of liabilities, details of liabilities of the transferee unit and copy of agreement. 07.01.2011 The Assistant Commissioner issued a letter to the Respondent requiring them to submit any document showing transfer of the capital goods and inputs of Vivin Laboratories at the time of taking over. 12.01.2011 The Respondent submitted reply letter to the Assistant Commissioner, produced copies of invoices showing the sale of plant and machinery, electrical goods, lab equipment, etc. 17.01.2011 The Assistant Commissioner issued a letter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods were not in possession of Vivin Laboratories. (e) Hence, permitting transfer under Rule 10 of Cenvat Credit Rules, 2004 is not permissible. 9. The Learned Commissioner (Appeals) vide the impugned OIA No. 26/2011 (V-II), dated 29.08.2011 allowed the appeal with the following observations: (a) The Respondent requested the JAC for registration of premises taken over from Vivin, to issue fresh registration and the same was granted on 27.01.2010. (b) Vide letter dated 18.03.2010, the Respondent has requested for transfer of Cenvat Credit on inputs and Capital Goods and the Range Officer has recommended for the same vide report dated 27.01.2010. (c) The purchase implementation Agreement dated 04.12.2009 submitted by Matrix it was clear that Vivin transferred full legal and beneficial title and ownership of all assets to Matrix. In terms of Sale deed dated 30.12.2009, sale of land was executed and the sale of Plant, Machinery etc was done on the strength of invoice dated 30.12.2009. Therefore, the factory remained the same (in the same premises) and there is merely change in the ownership as a result of sale and the business is continued by the assessee in the same premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the Sale of Plant and Machinery, Electrical Goods, Lab Equipment etc for an amount of Rs.40,86,42,174/- and Rs.2,42,61,712/-. After due process, the Assistant Commissioner, rejected the claim of M/s Matrix, for transfer of Cenvat Credit, vide Order-In-Original C.No.V/30/15/2009-Tech, dated 11.03.2011, as the required documents and explanation were not provided. 10.3 In this regard, it is pertinent to note the relevant provisions of Law viz Rule 10 of Cenvat Credit Rules, 2004: "RULE 10. Transfer of CENVAT credit. --(1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory. (2) If a provider of output service shifts or transfers his business on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Commissioner (Appeals) could decide the issue, M/s Matrix have taken the Cenvat Credit of Rs.1,83,70,133/- into their account during March, 2011. 11. The impugned Order-In-Appeal No.26/2011, dated 29.08.11, needs to be set aside on the following grounds: 11.1 This fact of M/s Matrix taking Cenvat Credit on its own, was brought to the notice of Commissioner (Appeals), vide Asst. Commissioner letter dated 15.07.2011, which in effect rendered the M/s Matrix appeal before Commissioner (Appeals) infructuous. However, Commissioner (Appeals) without considering the factual position has passed Order-In-Appeal (OIA) No.26/2011, dt.29.08.2011, in M/s Matrix favour. Hence, the impugned Commissioner (Appeals) Order-In-Appeal is liable to be set aside on this count alone. 11.2 M/s Matrix have not submitted any document of indicate/nor any evidence prescribing specific provision for transfer of liabilities of such factory. In the absence of such a specific provision, the transfer of Cenvat credit to M/s Matrix from M/s Vivin Labs is not tenable and erroneous in Law. 11.3 M/s Matrix, could not produce any document, to correlate the items mentioned in the annexures enclosed to the Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities, specific condition that inputs and capital goods should be transferred and that required documents should be submitted to the Assistant Commissioner concerned. So, the reading of Commissioner (Appeals) that transfer of Cenvat credit is automatic is untenable in law. 12. In this regard, the Department places reliance of the following decisions: (i) Hon'ble Tribunal in the case of Sunpack vs CCE, Pondicherry, reported in [2008 (223) E.L.T.(95) Tri -Chennai], held as follows; "In the instant case, the finding of the authorities is to the effect that the appellants had satisfactorily accounted for the inputs and capital goods and they had transferred these materials along with the credit balance available. This was in accordance with law." (para 6). (ii) Hon'ble Supreme Court of India Larger Bench in the case of M/s Dharmendra Textile Processors, reported in [2008 92310 E.L.T.3(S.C.)], held as follows; "13. It is a well-settled principle in law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee interalia urges that prior permission for transfer of unutilized credit is not mandatory in terms of Rule 10 of CCR. There is no force in the ground of Revenue that assessee has taken credit without waiting for permission from the Department, in view of the provisions of Rule 10 of CCR. 13.1 A plain reading of Rule 10(1) of the CCR (quoted hereinbefore), it is clearly provided that if a manufacturer of the final products shifts his factory to another site, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred factory. Further, in terms of Rule 10(3), ibid, the transfer of cenvat credit shall be allowed in case of the inputs or the capital goods is also transferred along with the factory premises to the new ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for. 13.2 It is humbly submitted that there is no specific stipulation contained in Rule 10 that prior permission is required from the statutory authorities for transferring the Cenvat credit as a result of amalgamation/merger. In this regard, the Respondent places reliance on the following decisions: (i) S.C. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplied with, where under transfer of credit is only permissible if the stock of inputs or capital goods is also transferred on account of sale. That rejection of transfer of credit in the present case was valid since the sale deed has established that no plant and machinery was transferred and there was no transfer of liabilities. 15. In this regard, the conditions prescribed under Rule 10 of the CCR for transfer of credit are as below: (a) The factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease. (b) There is a transfer of liabilities of such factory. (c) CENVAT credit is lying unutilized in the accounts to such transferred, sold, merged, leased or amalgamated factory. (d) The stock of inputs as such or in process, or the capital goods is also transferred along with the factory and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise. 16. It is further submitted that the premises of Vivin Laboratories was transferred pursuant to sale deed dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in the respective registers. The rule does not require that the assessee can transfer the credit corresponding only to the quantum of inputs transferred to the new factory, but permits the assessee to transfer the available credits along with inputs and capital goods in stock at the factory to the new location. Thus, requirement of Rule 8 has been fulfilled by the second respondent." 22. The afore mentioned decision of Madras High Court was maintained by the Hon'ble Supreme Court in Commissioner v. CESTAT - 2009 (237) E.L.T. A48 (S.C.)]. Even when no inputs are lying in stock, transfer of cenvat credit in respect of inputs cannot be denied. 22.1 The Respondent submitted that there were no inputs lying in stock on the date of transfer of premises to the Respondent and the said fact was also verified by the Range Officer's Report, however, the JAC kept asking the Respondent to provide stock ledgers of Vivin Laboratories, even though the returns for availing cenvat credit in respect of the inputs as filed by Vivin Labs was available with the department. 22.2 Even otherwise, when no stock of raw material relating to credit is available, request for transfer of unutilized c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the capital goods on which credit was availed were duly accounted for, as contemplated by Rule 8(2)of the Cenvat Rules. It is evident that the question of transferring stock of inputs could arise only if it exists in cases where capital goods on which credit has been availed have been duly accounted for. In other words, where the stock did not exist and the capital goods, on which the credit was availed, were duly accounted for, transfer of Cenvat credit lying unutilised, should not be refused. For statistical purposes, where in such cases there is no stock of inputs, the transfer entry would show transfer of "Nil" stock." (c) CCE Vs. Dr. Reddy'sLaboratoriesltd, 2005 (191) ELT 660 (Tri.Che) (d) AAR AAY Products Pvt. Ltd. V/s. CCE, 2003 (157) ELT 40 (Tri.Del) (e) Apco Industries Ltd Vs CCE, 2004 (177) ELT 647 (Tri.Mum) (f) New Chem Industries Ltd s. CCE, 2005 (191) ELT 614 (Tri.Mum) (g) CCE Vs. Smithkline Beecham Consumer Health Care Ltd., 2007 (209) E.L.T. 96 (Tri. - Chennai) No requirement for specific provision for transfer of liabilities. 23. The revenue has contended that there should be a specific provision for transfer of liabilities to the new owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mprehensive Dictionary of the English Language - 4. pl. A distinct portion of real estate; land or lands; land with its appurtenances, as buildings: - The Chambers Dictionary (in pl) the aforesaid (property; law); hence, a building and its adjuncts, esp. a public house or place of business; Precincts - Oxford Encyclopedic Dictionary Space enclosed by walls or other boundaries of a place or building, esp. of place of warship; boundary; (pl.) environs. 2. (town planning) Area from which main-road (or all) traffic is excluded. 3. Subdivision of county or city or ward for election and police purposes. - The New International Webster's Comprehensive Dictionary of the English Language 1. A place definitely marked off by fixed lines; also, the boundary of a designated place. 2. A minor territorial or jurisdictional district. 31. Therefore, only the liabilities in respect of the premises transferred by Vivin Laboratires to the Respondent, such as lien over property, encumbrances etc. were to be taken into consideration for the purpose of Rule 10 of CCR, rather than all the liabilities of the Company such as creditors, loans etc. 32. In the present case, it is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. However, the only issue which remains is the submission of all documents by the appellant pertaining to the transfer of credit on the basis of which the quantum of credit avaialbe to the appellant is required to be decided. On this issue, I direct the appellant to furnish all the records/documents pertaining to transfer of the impugned credit within 10 days from receipt of this order to enable the JAC to quantify the cenvat credit to be transferred and pass an order to that extent." 38. From the above, it is evident that the Appellate Authority had clearly provided the scope of verification to be undertaken by the original authority while remanding the matter vide the impugned order. The Original authority was merely required to quantity the admissible cenvat credit that could be transferred to the Respondent based on the information/documents provided by the Respondent vide their letter dated 25.10.2011. 39. When the Appellate Authority has taken into consideration the project implementation agreement while passing the impugned order and directed the original authority to consider the documents submitted by the Respondent pursuant to the impugned order, the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursuant to the impugned order. 45. Further, in respect of the details pertaining to stock of inputs and ledgers of Vivin Laboratories, the Respondent on numerous occasions intimated that on date of transfer of premises, no inputs were lying in stock and the same was also verified and mentioned in the Range Officer's Report. 46. Therefore, the revenue's contention that the Respondent failed to submit documents is contrary to the findings in the order of the original authority. A baseless ground has been taken that the Respondent has not provided documents required for verification of cenvat credit eligible to be transferred. Peculiarly, it is not mentioned what further information was sought by the JAC to be satisfied, for permitting transfer of credit in terms of Rule 10 of CCR. 47. Further, as recorded in the impugned order, the Respondent was not given adequate opportunity of personal hearing, and the JAC rejected the transfer of credit on grounds of lack of correlation of documents, in violation of principles of natural justice. 48. Having considered the rival contentions we find that the Respondent is the successor owner of the factory of Vivin Laboratories, with its assets ..... X X X X Extracts X X X X X X X X Extracts X X X X
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