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CCE, Chennai Versus M/s. Supreme Petrochem, Ltd.

2015 (12) TMI 1304 - CESTAT CHENNAI

Transfer of cenvat credit lying unutilized in the accounts of M/s. SPL Polymers Ltd amalgamated with the respondents M/s. Supreme Petrochem, Ltd. - Imposition of interest and penalty - Held that:- It is not the case of transfer of capital goods and inputs from one company to another. But, it is an amalgamation of M/s. SPL Polymers Ltd. with M/s. Supreme Petrochem Ltd., which have become one entity on amalgamation. The new entity is entitled to Cenvat credit which was lying unutilized in the acco .....

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Revenue. - E/254/2012 & E/CO/5054/2012 - FINAL ORDER No. 41445 / 2015 - Dated:- 5-10-2015 - Shri P.K. Choudhary, Judicial Member For the Petitioner : Shri B. Balamurugan, AC (AR) For the Respondent Shri. M. Karthikeyan, Adv., ORDER Revenue filed this appeal against the Order of the Commissioner (Appeals) dated 12.01.2012. 2. The brief facts of the case are that M/s. Supreme Petrochem, Ltd., are manufacturers of Expandable Polystyrene Resins falling under CETSH 3903 1100 of CETA, 1985. Vide Honb .....

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er permitting transfer of unutilized credit of ₹ 44,52,961/-. Vide SCN dated 13.07.2009, the Jt. Commissioner denied the transfer of unutilized credit of ₹ 44,62,413/- along with interest and penalty attributable to inputs, not in stock and proposed to recover the amount of unutilized credit already transferred. On adjudication, the Asst. Commissioner vide OIO No. 6/2009 dated 21.12.2009, confirmed the demand of ₹ 44,62,413/- along with interest and imposed a penalty of ₹ .....

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ess of this amount would lapse; (iii) that ₹ 44,62,413/- availed as credit in excess of the credit attributable to the inputs which were lying in stock and/or (ii) in process and (iii) contained in the final products lying in the stock, is recoverable with interest from the assessee under Rule 14 of the CCR r/w Section 11A and 11AB of CEA, 1944; (iv) that the Respondent have availed such credit in contravention of Rule 10 of the CCR, 2004 and hence, liable for penalty under Rule 15 of CCR, .....

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hat unutilized credit is not transferable as there is no provision under Rule 10 of the Cenvat Credit Rules, 2004 for transfer of credit without transfer of inputs relating to such credit balance. He reiterated the grounds of appeal and submits that as per Rule 10 of the Cenvat Credit Rules, 2004, when a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in the ownership or on account of sale, merger, amalgamation, lease or tr .....

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l products lying in stock is only liable to be transferred and any credit excess of this amount would lapse. This circular was brought out in the OIO and the Commissioner (Appeals) has conveniently has not taken note of this at all. He further submits that the Order passed by the Commissioner (Appeals) is not legal and proper and hence liable to be set aside and the Order of the adjudicating authority to be restored. 4. The Ld. Counsel on behalf of the respondents Shri M.Karthikeyan, submits tha .....

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d in a plethora of decisions that the credit of cenvat is transferable even if there is no corresponding stock of inputs available at the point of time. He relies on the following case laws :- 1. Sunpack Vs. CCE. Pondicherry 2008 (223) ELT 95 (Tri.-Chen.) 2. CCE, Pondicherry Vs. Cestat 2008 (230) ELT 209 (Mad.) 3. Shree Rama Multi-tech Ltd. Vs. CCE, Pondicherry 2007 (217) ELT 136 (Tri.-Chen.) 4. CCE, Pondicherry Vs. Cestat 2009 (240) ELT 367 (Mad.) 5. Kevin Enterprises Pvt. Ltd. Vs. CCE, Vadodar .....

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levant portion of the said order is reproduced for better appreciation of facts and law on the point and also the decisions of the coherent Benches and Honble Supreme Court as cited by him: 5.0. I find from the records that the Show cause notice was issued to the appellant for the excess credit availed between the unutilized input credit transferred at the time of amalgamation and the proportionate credit involved on inputs and work in progress inputs that are actually transferred. The Departme .....

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e officer had allowed the Cenvat Credit on Capital Goods and Service tax fully whereas the input credit was allowed to the tune of ₹ 42,64,679/-The Department denied the transfer of credit based on Rule 10(3) of Cenvat Credit Rules 2004., which is reproduced below: 10(3) : The transfer of the Cenvat Credit under Sub-rule (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 .....

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dit for a second time, in the case of inputs lying in stock. It is not the case of the department that the inputs were not received in the factory at the time of taking the credit or there was a short receipt of inputs. Once the inputs are properly accounted and credit taken to the satisfaction of the Jurisdictional Central excise officer, it cannot be restricted at the time of amalgamation proportionate to the transferred inputs. Reasonably, when the appellant had undertaken all liabilities, as .....

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ysical transfer to any inputs or capital goods. On perusal of the Hon ble High Court s order in C.P. No. 91/2008 dated 16.06.2008, and other relevant documents, I find that it is not the case of transfer of capital goods and inputs from one company to another. But, it is an amalgamation of M/s. SPL Polymers Ltd. with M/s. Supreme Petrochem Ltd., which have become one entity on amalgamation. The new entity is entitled to Cenvat credit which was lying unutilized in the accounts of the amalgamating .....

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