2006 (6) TMI 449 - AT - Central Excise

Tribunal Orders Fresh Review on Cenvat Credit Transfer: Emphasizes Proper Accounting of Capital Goods & Input Stock.

KEVIN ENTERPRISES PVT. LTD. Versus COMMISSIONER OF C. EX., VADODARA

The Tribunal remanded the case to the Commissioner for fresh consideration, emphasizing the need for a specific finding on the absence of input stock and ... Cenvat/Modvat - Transfer of unutilised credit on shifting of unit - no stock of inputs - whether there existed provision under Rule 8 of the Cenvat Credit Rules, 2001 for transfer of credit without transfer of inputs related to the credit - HELD 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. It is evident that the question of transferring stock of inputs could arise only if it exists in cases where capital goods on which credit has been availed have been duly accounted for. In other words, where the stock did not exist and the capital goods, on which the credit was availed, were duly accounted for, transfer of Cenvat credit lying unutilised, should not be refused. For statistical purposes, where in such cases there is no stock of inputs, the transfer entry would show transfer of “Nil” stock. The impugned communication dated 20-7-2001 and the order of the Commissioner referred to therein is set aside - matter remanded to the Commissioner for a fresh consideration and decision in accordance with the law after hearing the parties - appeal allowed by way of remand. Issues:Transfer of unutilized Cenvat credit without transfer of inputs.Analysis:The appeal was against the decision of the Commissioner of Central Excise and Customs, Vadodara, who did not consider the appellant's request for transfer of Cenvat credit without the transfer of inputs related to the credit. The appellant had applied for transfer of Modvat credit and balance in PLA from their Vadodara unit to their Mumbai unit. The Deputy Commissioner, Mumbai, had no objection to the transfer of unutilized Cenvat credit and shifting of plant and machinery. The Commissioner, however, did not consider the request citing the absence of a provision for transfer of credit without transfer of inputs under Rule 8 of the Cenvat Credit Rules, 2001.The appellant argued that since there were no inputs, the question of transferring inputs did not arise. They relied on previous Tribunal decisions that supported the transfer of credit even when there were no physical stock of goods at the old premises. The department's representative contended that the appellant did not satisfactorily account for the capital goods on which credit was availed. The Commissioner's order lacked a specific finding on the appellant's claim of no stock of inputs and the satisfactory accounting of capital goods, as required by Rule 8(2) of the Cenvat Rules.The Tribunal found that the Commissioner's order lacked a proper consideration of the appellant's plea and did not provide a speaking order. It was noted that a specific finding was necessary regarding the absence of stock of inputs and the proper accounting of capital goods for the transfer of Cenvat credit. The Tribunal emphasized that transfer of credit should not be refused if there is no stock of inputs but the capital goods are duly accounted for. Therefore, the matter was remanded to the Commissioner for a fresh consideration and decision after hearing the parties. The appeal was allowed by way of remand.