Cenvat credit on transferred capital goods depends on proof of prior availment and valid transfer documents.

Cenvat credit on capital goods transferred from one factory to another was examined on whether the credit had already been taken at the transferor unit and whether the transfer documents were acceptable duty-paying records. Credit was denied for the machines covered by Bill of Entry No. 2615 because the record showed that credit had in fact been taken at the Pune unit. For the goods covered by Bills of Entry Nos. 2912 and 1576, the department could not prove prior availment at Pune, and the transfer challans cross-referenced the relevant Bills of Entry and showed receipt and installation at the transferee unit; credit was therefore allowable at Noida.

---

---

Issues: Whether Cenvat credit on capital goods transferred from one factory to another after a lapse of time was admissible where the credit had not been taken at the transferor unit in respect of some of the goods and the goods were received and installed at the transferee unit under challans with reference to the Bills of Entry.

Analysis: The disputed capital goods were imported on payment of appropriate customs duty and additional duty, and their receipt at the transferee unit was not denied. For the machines covered by Bill of Entry No. 2615, the credit had in fact been taken at the Pune unit and the denial of credit at the Noida unit was therefore sustained. For the goods covered by Bills of Entry Nos. 2912 and 1576, the record did not establish that the credit now in dispute had been taken at Pune. The transfer challans carried cross-reference to the relevant Bills of Entry, and the goods had been installed at the Noida unit. Rule 57AE(1)(h) of the Central Excise Rules, 1944 recognizes an invoice issued for clearance of inputs or capital goods as such as a duty-paying document, and the Tribunal treated the transfer challans as acceptable documents in the circumstances. On the facts, the department failed to prove prior availment of the disputed credit at Pune for these goods.

Conclusion: Credit was not admissible for the goods covered by Bill of Entry No. 2615, but the assessee was entitled to Cenvat credit at the Noida unit in respect of the goods covered by Bills of Entry Nos. 2912 and 1576.

---