I have a query relating to transfer of cenvat credit lying unutilised in one of our manufacturing unit which has been closed for more than a year.
I want to transfer the unutilised credit to one of our other manufacturing unit.
Please guide us if you have any opinion in this regard.
1. Further would it matter if the Cenvat Credit pertains to both of Capital Goods and Inputs.
2. As we have transferred all the closing stock to our other unit but respective capital goods have not yet been transferred. Can we transfer the corresponding Credit without transferring the capital goods to our other unit?
3. Do the Excise Department has any role in transferring the cenvat credit?
Please advise us in this matter.
Posts / Replies
yes, central excise department has a reole, in this connection refer to rule 10 of the cenvat credit rules 2004. this transfer of credit can be done after seeking due permission from the jrisdictional ac/dc. As per rule said above input or capital goods need to be transfered as well.
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 a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business.
(3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership 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.
Dear Mr. Sandeep,
Prior permission is not required under the existing rules for transfer of cenvat credit.
However, all the INPUTS, W.I.P, S.F.GOODS and the Capital Goods will also have to be shifted to the new registered premises .
one should intimate to the jurisdiational .A.C/ D.C(BOTH THE OFFICERS) alongwith the list of all the goods and CENVAT amount being transferred.
once the department verifies/ satisfies themeselves of the proper accountal of all the goods in the new premises only then you will be ALLOWED to avail the cenavt credit.
Please note that the complete unit should be shifted , as the partial transfer of the unit will not be allowed , to my mind.(as you have stated in your query that the capital goods were not shifted initially).
in the absence of any clarification / circular from the CEBC on the issue so far, you should exercise abundant caution on this matter.
Thanks to All!!
But I have a specific question relating to transfer of Cenvat Credit on closing stock belonging to a manufacturing unit which has already been closed and the underlying stock ( and not capital goods) has been transferred to other manufacturing unit ( and no shifting of unit).
Rule 10 of CCr 2004 deals with sale or shifting of unit which is not my case. In my case stock has been transferred to an existing manufacturing unit belonging to assesse.
For example, in case of M/s Rama Industries Vs CCE 2009, refund of untilised credit was allowed in case of closing of manufacturing unit.
Keeping in view of Excise Authorities' role in dealing with transfer of Cenvat Credit, would someone can mail me the exact procedure to apply for transfer of cenvat credit.
This case mentioned by you exactly is not defined in central excise. You have not mentioned in your question by what way gooods have been transferred to some other unit from a closed unit. If u have purchased these goods from the unit which has been closed they can simply issue a cenvatable excise invoice under rule 11 of central excise rules 2002 and u can take credit thereof. So there is no problem. If this is not a case then make sure that how the units you are stating closed is closed in real sense. have they surrendered their registration certificate to central excise department. do they have any arrear due to the department. is there any case pending against them? if there is any such situation, I advise not to take credit in such case. If the unit is not closed for central excise purpose and they have transferred their goods to you unit, what was the consideration for such transfer is really very important. In any case the unit will have to reverse as much of cenvat credit eithher on input or capital goods which was taken when the goods was received in the factory. so if the unit(closed) have reversed that much of cenvat credit and you have sufficient proof in this regard you can go for taking cenvat credit without any permission, but beware, you will have to convinve central excise officers coming for audit in this regard convincingly. Hope answered ur query.
Kindly note that strictly speaking your case do not follow within Rule 10 of CCR. I suppose you have transsferred the inputs of closed unit to tour own unit and inputs have been removed as such. Therefore, your closed unit has to reverse CENVAt credit originally availed. Your closed unit can issue excisable invoice for inputs transferred to existing unit and on the basis of that invoice, your existing unit can take CENVAT credit.
I suppose without transferring capital goods, it will not be possible to utilize CENVAT credit.
Hope this will clarify the issue.
What is a procedure for transferring closing stock of a proprietorship business (which we are winding up) into our new private limited company?
Mr Aggarwal - The transfer of credit is not possible. The only way it could have been done was by removing the inputs under an excise invoice by reversal of credit, which could have been taken as credit by the receiving unit. It is too late for that now.
On the other hand, Mr Ahuja's situation is covered in Rule 10(1) as transfer of factory by change of ownership, and the credit can accordingly be transferred.
Ms. Radha Arun has given the right reply to your query.
my question one unit cenvat credit balance transfer to other unit
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quries can passoble to on unit to other unit cenvat credit balance transfer not closed in unit