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2017 (6) TMI 814 - MADRAS HIGH COURT

2017 (6) TMI 814 - MADRAS HIGH COURT - TMI - Utilisation of CENVAT credit - Whether in the facts and circumstances of the case, the Tribunal was right in coming to the conclusion that the respondent/ Assessee was entitled to avail of, un-utilized cenvat credit in terms of Rule 10 of the CCR, 2004? - Held that: - A mere perusal of sub-Rule (1) would show that transfer of cenvat credit is available to a manufacturer in several situations: First, when the manufacturer of final products, "shifts .....

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evenue. - C.M.A. No.645 of 2017 - Dated:- 28-4-2017 - Rajiv Shakdher And R. Suresh Kumar, JJ. For the Appellant : Ms. R. Hemalatha For the Respondent : Mr. R. Parthasarathy for M/s.Lakshmi Kumar JUDGMENT ( Judgment of the Court was delivered by Rajiv Shakdher, J. ) 1.We have heard the learned counsels for the parties. After some time, learned counsels are agreed, that not only can the appeal be admitted and a question of law be framed, but also, this Court could proceed to decide the question of .....

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sessee is a manufacturer of workstation chairs, which fall under tariff sub heading no.94033010 of the Central Excise Tariff Act, 1985 (in short, CETA). 2.2.The respondent had accordingly, obtained a Registration Certificate, for its manufacturing unit, set up at Hosur. This factory unit was closed with effect from 31.03.2010. Consequently, the Registration Certificate issued, qua, the Hosur manufacturing unit was surrendered by the respondent/assessee on 31.03.2010. 2.3.It appears, that the res .....

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e un-utilized cenvat credit, pertaining to the Hosur unit, by taking recourse to Rule 5 of the 2004 Rules. 2.6.We are informed, that this step was taken by the respondent/ Assessee, on the advice of the concerned Officers of the appellant/ Revenue. 2.7.This aspect of the matter is also reflected in paragraph no.3 of the order-in-original dated 27.07.2011. 3.Continuing with the narrative, it appears, that the refund claim was examined and thereafter, a show cause notice dated 28.02.2011 was issue .....

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riod spanning between 2003-04 to 2009-10, were produced for examination, before the Adjudicating Authority. 3.2.Inter alia, the record included the Delhi stock account in Form of RG1 maintained for the aforementioned period, as also the statement of cenvat credit availed on inputs. 4.The Adjudicating Authority, however, was not impressed with the stand taken by the respondent/assessee, in response, to the show cause notice issued in that behalf and accordingly, proceeded to pass the order-in-ori .....

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tinently, the Adjudicating Authority rejected this contention of the respondent/ Assessee. 4.2.In this behalf, the Adjudicating Authority made certain observations, which, for the sake of convenience, are extracted hereafter: 13.As far as, the transfer to the unit at Bangalore is concerned, I am of the considered opinion that there is no provision for transfer of unutilised cenvat credit accumulated on account of EOU and SEZ clearances under Rule 10 of Cenvat Credit Rules, 2004. Rule 10 of Cenva .....

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18.6.2010 also advising them to file Refund under Rule 5 of Cenvat Credit Rules, 2004. Hence there is no possibility of ordering transfer of cenvat credit lying unutilised under Rule 10 of Cenvat Credit Rules, 2004. 4.3.Being aggrieved, the respondent/ Assessee, carried the matter in appeal to the First Appellate Authority. 5.The First Appellate Authority, i.e., The Commissioner of Central Excise (Appeals) (in short, The Commissioner of Appeals), vide order dated 05.02.2014, confirmed the view t .....

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d fact that the operations at the Appellant's Hosur Unit was wound up, and its Registration Certificate surrendered. But the operation were not shifted to their then existing Bangalore Unit. It is not a case of amalgamation, or merger of two units. Appellant's unit at Hosur ceased to operate and the one at Bangalore continued as it was operating earlier. Both were not joined together with effect from 31.03.2010. The situation is not squarely covered under Rule 10 of the Rules. Further, t .....

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unal. Fortuitously, the Tribunal, agreed with the respondent/assessee and thus, proceeded to reverse the order of the Authority below. This time around, the Revenue is aggrieved and therefore, has filed this instant appeal. 7.Ms.Hemalatha, who appears for the Appellant/Revenue, assails the order of the Tribunal, on the ground that it has misinterpreted the provisions of Rule 10 of the 2004 Rules. 7.1.According to the learned counsel, Rule 10 can only come into play, when, there is either a trans .....

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y the Commissioner of Appeals, in paragraph no.6 of his order dated 05.02.2014. 9.Mr.Parthasarathy, on the other hand, in support of his stand, largely, relies upon the observations made in the impugned judgment and order of the Tribunal. 9.1.Furthermore, in support of the conclusion reached by the Tribunal, Mr.Parthasarathy relies upon the first limb of Rule 10 of the 2004 Rules, which permits, according to him, transfer of cenvat credit, where the assessee, i.e., the manufacturer of final prod .....

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evenue. 10.We have heard the learned counsels for the parties and perused the record. 11.According to us, clearly, the following emerges from the record: 11.1.The respondent/assessee had a manufacturing unit set up at Hosur, which was closed on 31.03.2010. 11.2.The Hosur unit was shifted by the respondent/assessee to Bangalore. 11.3.The Registration Certificate qua, the Hosur unit was surrendered by the respondent/assessee on 31.03.2010; 11.4.The original records with regard to the Hosur unit we .....

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rovisions of Rule 10 of the 2004 Rules, are extracted hereafter: 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 unutiliz .....

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ld, 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 .....

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y. It is, in these situations, the manufacturer is allowed transfer of cenvat credit lying un-utilized in his accounts, to such, transferred , sold , merged , leased or amalgamated factory. 12.3. One would notice that in sub-rule (1) of Rule 10, there is no reference to a circumstance, as in this case, where, an assessee may have relocated his business after completing the process of shifting from one place to another. 12.4. The submission advanced by Ms.Hemalatha, on behalf of the Appellant/Rev .....

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r site, say, place 'B'. We see no reason for concluding otherwise. Any other interpretation would lead to absurd results. 12.6.The argument of Ms.Hemalatha, that transfer of cenvat credit was not permissible, under Rule 10(1) of the 2004 Rules, since, there was no reference to a relocated unit in the latter part of the provision, is, in our view, misconceived. This argument of the learned counsel proceeds on the basis that Rule 10(1) contemplates only those situations, which are exemplif .....

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