Transfer of unutilised Cenvat credit permitted where factory closure and relocation of manufacturing were duly evidenced.

Unutilised Cenvat credit lying in a closed factory could be transferred to another unit where the manufacturing activity was shifted, provided the closure and relocation were supported by records. Here, the original unit had stopped production, closure was intimated to the department, and the assessee showed that machinery and workers were moved to the new location after regulatory action. On those facts, the conditions for transfer under Rule 8(2) of the Cenvat Credit Rules, 2004 were met, and the denial of transfer was unsustainable.

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Issues: Whether unutilised Cenvat credit lying in a closed unit could be transferred to the assessee's another unit on the facts showing closure of one factory and shifting of the manufacturing activity to a new location under Rule 8(2) of the Cenvat Credit Rules, 2004.

Analysis: The unit at Amirpet had stopped production, the closure was intimated to the department, and the assessee produced records showing that the machinery and workers were shifted to Dundigal after the unit was closed due to regulatory action. On these facts, the conditions for transfer of the accumulated Cenvat credit were satisfied. The earlier speaking order allowing the request was based on the evidence on record and the appellate reversal proceeded on an incorrect appreciation of the facts and the rule.

Conclusion: The assessee was entitled to transfer the unutilised Cenvat credit to the other unit, and the denial of such transfer was unsustainable.

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