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2022 (5) TMI 11 - AT - Service TaxTransfer of CENVAT Credit lying unutilized - amalgamation of entities - utilization of unutilized credit by transferree company - transfer of CENVAT credit by transferee entities and availment of the same by the appellants were disputed by the Department on the ground that as per the requirement of Rule 10(3) ibid, the transfer can only be effective, when stock of inputs as such or in process or the capital goods are also transferred from the transferor units to the transferee unit - CENVAT credit of service tax paid on the input services, can be availed by the transferee unit upon sale/merger with the business units of the transferors or not? - HELD THAT:- On a cogent reading of sub-rules (1) and (2) of Rule 10 ibid, it transpires that transfer and availment of unutilized cenvat credit is permissible under the statute, subject to fulfillment of the conditions that transfer of business must be on account of change of ownership or on account of sale, merger, amalgamation etc.; that there should be specific provision for transfer of liabilities of the business of service provider; that transfer is allowed only if stock of input as such or in process, or the capital goods are also transferred along with the business premises to the transferee company; and that the credit particulars are duly accounted in the books for satisfaction of the jurisdictional officer of Central Excise. Learned Commissioner appears to have erred in finding that transfer of cenvat credit on input services is permissible only on the amalgamation whereas in terms of Rule 10 (1) & (2) of Cenvat Credit Rules, such a transfer is permissible on transfer of business on account of sale, merger, amalgamation, lease or transfer of business to a joint venture without specific provision for transfer of liabilities of such business. It is found that there is no provision in the statute that each one of the situations mentioned therein should be approved by the Hon‟ble High Court. It is also noted that in the column ‘5B’ in the ST-3 return, titled as ‘cenvat credit taken and utilized', the appellants had reflected therein the credit particulars as ‘-', which means that as a result of merger, only cenvat credit of service tax was available in the books of accounts of the transferor company and no input or capital goods credits were available with them. Thus, it cannot be said that the appellants had not duly reflected the credit particulars in their books of accounts for the satisfaction of the Department officers - the appellants had duly complied with the requirements of Rule 10 ibid for availment of the cenvat credit lying unutilized in the books of the transferor‟s company and thus, denial of the cenvat benefit by the original authority will not stand judicial scrutiny. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants - appeal allowed - decided in favor of appellant.
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