Cenvat credit restoration allowed where clubbed units kept the same assessee identity and Rule 10 did not apply.

Where two manufacturing units were merely clubbed together and the assessee's identity remained unchanged, Rule 10 of the Cenvat Credit Rules, 2004 was held not to govern the restoration or transfer of reversed Cenvat credit. The relevant credit continued to relate to the same assessee, and the pre-September 2009 factual setting meant the merger or sale transfer provision was inapplicable. On that basis, the assessee's claim for restoration of credit was upheld.

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Issues: Whether Cenvat credit reversed by a DTA unit could be restored and transferred after the two units were clubbed together or merged, and whether Rule 10 of the Cenvat Credit Rules, 2004 applied in such circumstances.

Analysis: The dispute turned on the factual position that the assessee's identity remained unchanged and that the two units were merely clubbed together while functioning from the same premises. On that basis, the appellate authority's view that the situation did not attract the transfer provisions was accepted. Since the controversy had arisen before September 2009 and the credit, if allowed, would still pertain to the same assessee, the rule governing transfer of credit on merger or sale was held to be inapplicable.

Conclusion: Rule 10 of the Cenvat Credit Rules, 2004 did not bar restoration of the credit in the facts of the case, and the assessee's claim was upheld.

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