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2016 (7) TMI 1028 - CESTAT BANGALORE

2016 (7) TMI 1028 - CESTAT BANGALORE - 2016 (340) E.L.T. 517 (Tri. - Bang.) - CENVAT credit - transfer of CENVAT credit from lessor to the lessee - Rule 10 of CENVAT Credit Rules, 2004 - the appellant is rightly entitled to the CENVAT credit amounting to ₹ 49,08,230/- which was originally permitted to be transferred by the Assistant Commissioner, Yeshwathpur, Bangalore by his letter dated 23.11.2007 and there is no merit in the orders passed by the lower Revenue authorities. The appeal is .....

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gned Order-in-Appeal has upheld the Order-in-Original dated 25/26.5.2011 passed by Additional Commissioner, LTU, Bangalore, whereunder the demand of CENVAT credit of ₹ 49,08,230/- along with interest has been confirmed under the provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Sections 11A and 11AB of Central Excise Act, 1944 and Sections 73 and 75 of Finance Act, 1994; a penalty of ₹ 2,000/- has also been imposed on the appellant under Rule 15(1) of CENVAT Credit Rules, .....

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) on 15.2.2007 to operate the lease unit of M/s. BPRI as an export oriented unit (EOU) . ii. The leased unit viz., BPRL, Bangalore was given permission by Assistant Commissioner, Central Excise, Yeshwathpur Division, Bangalore for transfer of CENVAT credit and service tax credit lying unutilised in their capital goods account and input account (Rs.33,58,940.53 and ₹ 15,49,290/-) to the appellant viz., M/s. Medriech Ltd. under Rule 10 of CENVAT Credit Rules, 2014. The appellant availed the .....

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Rules, 2004 enables the transfer of CENVAT credit from lessor to the lessee and in their case, condition of transfer of capital goods and input account has been fulfilled. All the fixed assets lying with the unit were transferred to the lessee on hire basis as per the agreement. The agreement executed between M/s. BPRI and the appellant M/s. Medriech Ltd., dated 22.11.2006 gave detailed list of assets transferred to the lessee as required under the Rule. The liabilities on account of lease have .....

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appeal against this decision of CESTAT, Bangalore before Andhra Pradesh High Court was dismissed in the case of Commissioner vs. Nagarjuna Agrichem Ltd.: 2012 (319) ELT A247 (AP). b. Tera Cables India Pvt. Ltd. vs. CCE: 2010 (258) E.L.T. 111 (Tri.-Ahmd.) - Against this decision of CESTAT, Ahmedabad, Revenue s appeal was dismissed by Hon ble Gujarat High Court in the case of Commissioner vs. Tera Cables India Pvt. Ltd.: 2014 (299) E.L.T. A61 (Guj.). c. GTN Exports Ltd. vs. CCE, Coimbatore: 2009 .....

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led to take the unutilised CENVAT Credit of lessor unit. ii. Rule 10 of CENVAT Credit Rules requires specific transfer of liabilities which has not been done in this case. As per Circular No.77/1999 Cus. dated 18.11.1999, the CENVAT credit lying unutilised would lapse on conversion of DTA unit into an EOU unit and cannot be utilised after said conversion. 4. All the facts on record and the submissions of both sides have been carefully considered. 5. At the outset, it is little strange that when .....

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alty was also imposed. When there are number of case laws permitting such transfer of unutilised credit from the lessor unit to the lessee unit, even when initially the lessor unit is a DTA unit and after the execution of the lease agreement, when it is an EOU and lessee is also an EOU. There is no rational and merit in the demand confirmed against the appellant in this case, when Rule 10 of Cenvat Credit Rules, 2004 specifically allows such transfer of Cenvat credit and when there are number of .....

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inal 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. The above Rule grants the manufacturer to utiliz .....

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. = 2012 (278) E.L.T. 259 (Tri.). The said order of the Tribunal has been upheld by the Hon ble High Court of Bombay as reported in 2012-04-LCX-02-05. We also note that based upon the said judgment this Tribunal in the case of Matrix Laboratories Ltd. v. CCE - 2014-TIOL-2090-CESTAT-MUM. = 2015 (316) E.L.T. 168 (Tri.-Mum.) has also taken similar view. In the said judgment this Tribunal has observed as under : - 5.1 We observe that there is no bar for transfer of credit available in the books of a .....

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e books of accounts at the time of conversion from DTA to 100% EOU and therefore the impugned demands are not sustainable. Thus, the appeal is allowed with consequential relief, if any. 6. In view of the above position, we do not find any merits in the contention of the Revenue. We also note that the Board Circular No. 77/99-Cus. quoted does not elaborate under what provision the unutilised credit will stand lapsed. In any case, the said circular was issued when Rule 100H under old Central Excis .....

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