TMI Blog2006 (11) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... he order dated 28-5-2004 of the High Court of Karnataka. The Pondicherry unit stopped production w.e.f. October 2004 onwards and transferred the unutilized credit to the Bangalore Unit. On the direction of the Department, the credit taken was reversed. Thereafter, the appellants submitted a letter dated 28-12-2005 to the Pondicherry authorities and requested permission to transfer the available Cenvat credit balance of Rs. 15,85,47,475/- to their Bangalore factory. A letter dated 10-3-2006 was also submitted to the jurisdictional Assistant Commissioner of Customs, Bangalore informing that they would transfer the unutilized balance on Cenvat credit from Pondicherry unit to the EHTP unit at Bangalore. The Deputy Commissioner of Customs, Bangalore, directed the appellants not to transfer the balance of Cenvat credit in view of the fact that there was neither shifting of the factory nor there was any transfer of inputs/raw materials or finished goods. Moreover, the Pondicherry Excise authorities had not permitted such a transfer. The decision of the Revenue was contained in letters dated 15-3-2006, 11-5-2006 and 22-5-2006. The appellants appealed to the Commissioner (Appeals) for setti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered the original Registration Certificate on 26-8-2004. At that time, they requested for endorsement in the name of Hewlett Packard India Sales (P) Ltd. On receipt of the Registration Certificate endorsed in the name of Hewlett Packard India Sales (P) Ltd., the appellant in their letter dated 14-9-2004 requested the Assistant Commissioner, Pondicherry inter alia, to permit the transfer of Cenvat credit to them. On 28-12-2005, the appellants informed the Assistant Commissioner, Pondicherry, their proposal to transfer Cenvat credit of Rs. 15,85,47,475/- to their Bangalore factory and also intimated the reversal of Rs. 3,45,128/- made in the month of February 2005 on account of raw materials and finished goods lying as on 9-7-2004. On 10-3-2006, they informed the Assistant Commissioner of Central Excise, Bangalore that they would transfer the unutilized balance of Cenvat credit from Pondicherry. On 17-5-2006, they surrendered the Registration Certificate of Pondicherry unit consequent to closure of Pondicherry unit and shifting of manufacturing activity to Bangalore. On 15-3-2006, the Deputy Commissioner, Bangalore, directed the appellants not to transfer the balance of Cenvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration Certificate of the Pondicherry unit was also surrendered. It is seen from the ER1 return as on November, 2005 that the Pondicherry Unit had a balance of Cenvat credit of Rs. 15,85,47,475/- lying unutilized. Even immediately after the amalgamation order, the appellants had informed the jurisdictional authorities their intention to transfer the unutilized credit to Bangalore unit in terms of Rule 10 of Cenvat Credit Rules, 2004. Question of law :- (a)Coming to the questions of law, the relevant rule is Rule 10 of Cenvat Credit Rules, 2004. The Rule is reproduced below :- "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 chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) is not correct. Rule 11 of Cenvat Credit Rules, 2004 deals with Transitional provisions. According to that Rule, any amount of credit earned by a manufacturer under Cenvat Credit Rules, 2002 as they existed prior to the 10th day of September 2004, and remaining unutilized on that day shall be allowed as Cenvat credit to such manufacturer. Rule 11(2) speaks of a situation when a manufacturer opts for exemption under a Notification based on value or quantity of clearances in a financial year, in that situation, the manufacturer shall be required to pay an amount equivalent to the Cenvat credit in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the above said amount if any balance is lying then that balance would lapse. Such a situation actually has not arisen in the present case. Therefore, the conclusion of the Commissioner (Appeals) that the credit is not available and would lapse is not correct and legal. In our view, the credit lying unutilized would be actually available for transfer. (c)As regards prior permission for transfer of credit, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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