TMI Blog2023 (8) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... p. The respondent-assessee is entitled to take transfer of Cenvat Credit available in the books of the transferor Vivin Labs, as per Rule 10 of Cenvat Credit Rules. Appeal of Revenue dismissed. - HON BLE Mr. ANIL CHOUDHARY, MEMBER (JUDICIAL) And HON BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL) Shri V R Pavan Kumar, Authorised Representative for the Appellant Shri Ch. Sumanth, Advocate for the Respondent ORDER [ ORDER PER : ANIL CHOUDHARY ] The issue in this appeal by Revenue is whether the appellant is rightly entitled to CENVAT credit which was available in the books of accounts of one Vivin Laboratories Private Ltd., as they have taken over the plant and machinery of the said company on outright sale basis, including transfer of land. 2. The brief facts are that M/S Matrix Laboratories Limited (Now M/s Mylan Laboratories limited) is a manufacturer of bulk drugs and drug intermediates falling under Chapter 29 of the Central Excise Tariff act, 1985. The Respondent is registered with Central Excise bearing Registration No.AADCM3491MEM018 w.e.f. 27.01.2010. 3. The Respondent acquired the factory premises (land) of M/s Vivin Laboratories Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting transfer of the Credit amounting to Rs. 1,83,18,042/- for the following reasons: there was no stock of inputs lying in the process as on 27.01.2010. capital goods were installed at the factory and the ownership was transferred to Matrix Laboratories limited. The ER-1 return for the month of January 2010 filed by Vivin labs was verified and a credit amounting to Rs.1,83,18,042/- (Rs.2,06,056 towards input credit and Rs.1,81,11,990 towards Capital Goods Credit) was lying in the balance. Vivin labs had taken 50% of CENVAT credit on capital goods during the period 2009-10 (upto Jan 2010), i.e., Rs. 10,55,509/-. Matrix laboratories Limited was eligible for the remaining balance of 50% of the credit of Rs. 10,55,509/- in the F.Y. 2010-11 on account of capital goods. 20.09.2010 Superintendent issued a letter to the Respondent, requiring them to furnish information/ documents regarding the nature of acquisition, agreement for transfer of liabilities, details of liabilities of the transferee unit and copy of agreement. 07.01.2011 The Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd penalty 08.03.2012 The Respondent submitted their reply to the SCN dated 10.02.2012. 8. The Assistant Commissioner had rejected the transfer of Credit vide order dated 11.03.2011 on the following grounds: (a) The factory premises of Vivin Laboratories was transferred to Matrix through sale deed dt 30.12.2009 which transfers only the landed property and others but not the plant and machinery comprising the capital goods. (b) Further, no specific provision was made in the sale deed for transferring the liabilities along with assets. (c) Co-relation could not be made to establish the items mentioned with the entries mentioned in RG23C Part II extracts of Vivin Laboratories. (d) Further, the goods were transferred through Sale from Vivin Laboratories to Matrix against which sales tax was paid. Therefore, it has to be construed that the goods were not in possession of Vivin Laboratories. (e) Hence, permitting transfer under Rule 10 of Cenvat Credit Rules, 2004 is not permissible. 9. The Learned Commissioner (Appeals) vide the impugned OIA No. 26/2011 (V-II), dated 29.08.2011 allowed the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the strength of documents produced by them. 10. Being aggrieved the Revenue is in appeal against the Order of Commissioner (Appeals). Learned AR for Revenue Shri V R Pavan Kumar interalia urges as follows: 10.1 The Assistant Commissioner (AC), had called for a report from Range Officer, and on receipt of report, the Division Office, further called for the documents with regard to change in ownership. Consequently, the Range Officer, forwarded a copy of Sale Deed dated 30.12.2009, entered between M/s Matrix Labs and M/s Vivin Labs., which only deals in respect of Land Buildings. The Sale Deed clearly states that NO PLANT AND MACHINERY IS BEING TRANSFERRED THROUGH THE SALE DEED . 10.2 M/s Matrix, were requested to furnish the documents showing transfer of Capital goods and Inputs from M/s Vivin Labs. In response, M/s Matrix vide letter dated 12.01.2011, produced copies of Invoices bearing No.100/30.12.2009 and 101/30.12.2009, showing the Sale of Plant and Machinery, Electrical Goods, Lab Equipment etc for an amount of Rs.40,86,42,174/- and Rs.2,42,61,712/-. After due process, the Assistant Commissioner, rejected the claim of M/s Matrix, for transfer of Cenvat Credit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of change in ownership,the following conditions have to be met for transfer of Cenvat credit; (i) it should contain specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilised in his accounts to such transferred factory. (ii) Further, the said Cenvat Credit can only be allowed to be transferred, if the stock of inputs, as such or in process, or the capital goods are also transferred along with the factory or business premises to the new ownership and (iii) inputs and capital goods on which credit has been availed of are duly accounted for to the satisfaction of the Deputy/Assistant Commissioner. 10.5 As the conditions required appeared to be not met, the Assistant Commissioner, has rejected the permission to transfer of Cenvat credit to the new ownership vide Order dated 11.03.2011. M/s Matrix went in for appeal to the Commissioner (Appeals) and even before the Commissioner (Appeals) could decide the issue, M/s Matrix have taken the Cenvat Credit of Rs.1,83,70,133/- into their account during March, 2011. 11. The impugned Order-In-Appeal No.26/2011, dated 29.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Invoices, were made available to the Range Officer subsequently by M/s Matrix, after submission of Range Officer report, as such transfer of Cenvat credit could not be allowed solely on the basis of Range Officer Report, when the Proper Officer for Transfer to Cenvat Credit to new ownership of a factory, is the Assistant Commissioner. 11.7 Another important factor is the goods in question which are said to have been transferred, have in fact been sold under invoices by M/s Vivin Labs to M/s Matrix, on payment of Sales Tax, as such the said transaction, is governed by provisions of Rule 3 of CCR, 2004 and not governed by provisions of rule 10 of CCR, 2004. 11.8 The Commissioner (Appeals) findings that the transfer of Cenvat credit to the new ownership is automatic, is an erroneous reading of provisions of law. The transfer of Cenvat credit to new ownership is definitely subject to conditions stipulated in the Rule 10 of CCR, 2004, including specific provision for transfer of liabilities, specific condition that inputs and capital goods should be transferred and that required documents should be submitted to the Assistant Commissioner concerned. So, the reading of Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IRC v. Ross Minister Ltd. (1979) 52 TC 160 (HL). It is stated, however, much the courts may deprecate an Act, they must apply it. It is not possible by torturing its language or by any other means to construe it so as to give it a meaning which Parliament clearly intend it to bear. We may also add that where the Legislature clearly declares its intent in the scheme of a language of Statute, it is the duty of the Court to give full effect to the same without scanning its wisdom or policy and without engrafting, adding or implying anything which is not congenial to or consistent with such express intent of legislature. Hardship or inconvenience cannot alter the meaning employed by the Legislature if such meaning is clear on the face of the Statute. If the Statutory provisions do not go far enough to relieve the hardship of the member, the remedy lies with the Legislature and not in the hands of the Court. (para 26) 13. Opposing the appeal Counsel for the Respondent-assessee interalia urges that prior permission for transfer of unutilized credit is not mandatory in terms of Rule 10 of CCR. There is no force in the ground of Revenue that assessee has taken credit without waitin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g shown and reasons to be recorded in writing, be extended by the Principal Commissioner of Central Excise or Commissioner of Central Excise, as the case may be, for a further period not exceeding six months. 13.4 Therefore, only pursuant to the amendment to Rule 10 of CCRw.e.f. 02.02.2017, it was provided that an application for transfer of cenvat credit was required to be made to the Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, wherein the cenvat credit was required to be allowed within a period of 3 months from the date of the application. 13.5 However, in the present case, during the relevant period, there was no such condition or provision under Rule 10 of the CCR to seek prior permission for transferring the cenvat credit available at the time of transfer of premises to the Respondent. The Respondent is eligible for transfer of unutilized credit in terms of Rule 10 of CCR. 14. It has been contended by the revenue that Rule 10(1) and Rule 10(3) of CCR are to be complied with, where under transfer of credit is only permissible if the stock of inputs or capital goods is also transferred on account of sale. That rejection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard, it is submitted that Rule 10 permits the assessee to transfer the balance in the credit ledger along with inputs or capital goods and does not require that the assessee can transfer credit corresponding only to the quantum of inputs/capital goods transferred to the new owner. 20. It is further submitted that the subject issue is not in respect of Rule 3 of the CCR as contended by the department, since the issue is not relating to eligibility of cenvat credit, but merely the transfer of cenvat credit available in the account of the transferer. 21. In this regard, reliance is placed on the decision of Hon ble Tribunal in the case of Sunpack vs. CCE, Pondicherry, 2008 (223) E.L.T. 95 (Tri. Chennai) and the same was affirmed by the Hon ble High Court of Madras in the case of CCE, Pondicherry vs. CESTAT, 2008 (230) ELT 209 (Mad.). The Hon ble Madras HC had held that: 8. From the above, it is clear that the capital goods, the inputs and the balance unutilised credit balance in question have been properly received and accounted for by the assessee in the respective registers. The rule does not require that the assessee can transfer the credit corresponding only to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the instant case. (b) Kevin Enterprises Pvt Ltd. vs. CCE, Vadodara, 2007 (219) E.L.T. 181 (Tri. - Mumbai)wherein it was held that: 5. It appears to us from the record that while sending a cryptic communication to the appellant, stating that the Commissioner did not consider the appellant s request as there were no provisions for transfer of credit without transfer of inputs, there was no indication as to whether the Commissioner had applied his mind for reaching the satisfaction as contemplated under sub-rule (21) of Rule 57F, which corresponds to Rule 8(2) of Cenvat Rules. It is apparent that, no hearing was given to the appellant by the Commissioner before the making of the said order. No speaking order of the Commissioner has been placed on record. As held in Aar Aay Products (supra), there was a clear lapse, where neither hearing, nor a speaking order had been made in such cases. It was incumbent upon the Commissioner to have given a specific finding in connection with the appellant s plea that there was no stock of inputs which could be transferred, and whether the capital goods on which credit was availed were duly accounted for, as contemplated by Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof where any excisable goods are manufactured. 28. The Hon ble Delhi High Court in para 7(4) of their decision in Delhi Cloth General Mills Co. Ltd. Vs. Joint Secretary, Government of India - 1978 (2) ELT J121 has held that the meaning of factory is not restricted to the part in which the excisable goods are manufactured but includes the whole of the premises in a part of which excisable goods are manufactured. 29. The Supreme Court in para 11 of their decision in Grauer Weil (India) Ltd. Vs. CCE - 1992 (57) ELT 321 (SC)has held that premises means a piece of land including its buildings or a building together with its grounds or appurtenances and precincts mean the areas surrounding a place. Further, the Supreme Court has held that any premises including the precincts thereof is wide enough to cover all buildings with its surroundings which form part of one unit. 30. The term premises and precincts have been defined in the following dictionaries as under: Premises - Oxford Encyclopedic Dictionary 3. (pl.) House, building, with grounds and appurtenances. - The New International Webster s Comprehensive Dictionary of the English Language ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard, the appeal has been filed placing reliance on numerous cases on the issue that liberal interpretation should not be given to a statutory provision. 36. It is humbly submitted that the contention of the revenue is not sustainable for the reason that the benefit of transfer of Credit available in the account of the transferer as contemplated in Rule 10 of the CCR cannot be rejected due to minor procedural infirmities and adopting a hyper technical approach adopted by Revenue as was held in the case of CCT, Hyderabad Vs Eenadu Television Pvt Ltd [2018(11) TMI 166-Cestat Hyderabad. 37. The revenue s contention that the Ld. Appellate Authority has remanded the matter without the scope of verification to be undertaken by the original authority is highly misconstrued and against the facts on record. In this regard, the relevant portion of the impugned order is extracted below: In view of the above, I am of the opinion, that the appellant is legally entitled to avail the cenvat credit which was transferred to the appellant on account of sale of the land, plant and machinery in terms of Rule 10 of cenvat credit Rules 2004 on the strength of the documents presented by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by the Respondent were not considered by the original authority and no opportunity was given to address the discrepancies in violation of principles of natural justice. 43. Therefore, the following documents were available on record of the Appellant Department: (a) Letter dated 12.01.2011 in reply to Department letter 07.01.2011. (b) Details of sale of plant machinery vide various invoices nos.100 and 101 dated 30.12.2009 which shows sale of Plant Machinery, Electrical Equipment, Laboratory Equipment, Computers printers, electrical equipment and furniture others along with annexures. (c) RG 23 C Part II extracts showing various items of capital goods received by Vivin from 10.03.2008 to 30.12.2009. (d) Letter dated 19.01.2011 in reply to the Department letter dated 07.01.2011that no stocks of inputs were available on date of transfer. (e) Sale Deed 30.12.2009. 44. Even otherwise, the Appellate Authority took into consideration the Purchase Implementation Agreement and remanded the matter to the original authority for valuation. The requisite documents including the purchase implementation agreement were also submitted by the Respondent vide lette ..... X X X X Extracts X X X X X X X X Extracts X X X X
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