TMI BlogCenvat credit of transferred unit cannot be denied when all assets and liabilities are transferred to AssesseeX X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat credit of transferred unit cannot be denied when all assets and liabilities are transferred to Assessee - By: - Bimal jain - Central Excise - Dated:- 22-11-2014 - - Dear Professional Colleague, Cenvat credit of transferred unit cannot be denied when all assets and liabilities are transferred to Assessee We are sharing with you an important judgement of the Hon ble Mumbai CESTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the case of Jai Corporation Ltd. Vs. CCE Vapi [2014 (11) TMI 29 - CESTAT AHMEDABAD] on following issue: Issue: Whether Cenvat credit of the transferred unit can be denied when all the assets and liabilities are transferred to the Assessee? Facts and background: Jai Corporation Ltd. ( the Appellant ) is engaged in the manufacture of synthetic blended/spun yarn fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling under Chapter sub heading 55095100 and 55092100 of the Central Excise Tariff Act, 1985 . The Appellant had taken over a defunct unit namely Santogen Spinning Mills ( the Unit ) from Assets Reconstruction Company (India) Ltd. ( ARCIL ) which was taken over under SAFARESI Act by the bankers and handed over to ARCIL. ARCIL is an Assets Reconstruction Company which is formed under the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Reserve Bank of India Act, 1934. ARCIL had taken over the Unit on June 6, 2005 and thereafter appointed various custodian-cum-agents who carried out manufacturing activity in their name without obtaining Central Excise Registration and without following any Central Excise procedure by following the Notification No.30/2004-C.E. dated July 09, 2004 as amended by Notification No.10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-C.E. dated March 1, 2005 and finally it sold out to the Appellant. The Appellant took fresh Central Excise Registration on December 9, 2005 to carry out manufacturing activity following the procedure of Central Excise laws. The Appellant in his Excise Return claimed Cenvat credit of ₹ 1,57,09,460/- showing a sold Cenvat credit balance transferred from the unit taken over by them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Department denied Cenvat credit so transferred from the Unit as wrongly availed and initiated proceedings for its recovery along with interest and penalty which was further confirmed by the Adjudicating Authority. Being aggrieved, the Appellant filed an appeal before the Hon ble CESTAT, Ahmedabad. Held: The Hon ble CESTAT, Ahmedabad, after elaborate discussion on Rule 10 the Cenv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Credit Rules, 2004 ( the Credit Rules ) held that: The sale certificate issued by ARCIL clearly transpires that the entire property of the Unit was handed over to the Appellant with all the encumbrances and liabilities which are known and unknown; The Appellant had fulfilled all the conditions of Rule 10 of the Credit Rules and procured all the assets and liabilities from ARCIL, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which would include Cenvat credit balance lying in Books of account of the Unit; Having accepted the entire assets and liabilities together, the Appellant cannot be denied Cenvat Credit which is lying in balance as unutilized credit in the Books of account of the Unit; Even after surrender of registration certificate, the Appellant chose to retain Central Excise record which made it clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they wanted to make a debit entry even after surrender of licence. Accordingly, the Hon ble Tribunal allowed the Cenvat credit to the Appellant, lying unutilized in the Books of account of the Unit. Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us. Thanks and Best Regards. Bimal J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain FCA, FCS, LLB, B.Com (Hons) Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase - I, Delhi 110091, India Desktel: +91-11-22757595/ 42427056 Mobile: +91 9810604563 Email: bimaljain@hotmail.com Web: www.a2ztaxcorp.com Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission. - Reply By PRAGYA SUCHIK as = Thanks for sharing the article sir....sir i have one query..as the fact of the case as all the liabilities were taken over by Jai Corporation and then what is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reason that such a simple case reaches upto CESTAT...thank u!! Dated: 23-11-2014 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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