2013 (9) TMI 814 - AT - Central Excise

Tribunal allows transfer of unutilized Cenvat credit between units

The Tribunal ruled in favor of the Appellant, allowing the transfer of unutilized Cenvat credit from a non-viable second unit to the first unit for ... CENVAT credit - transfer of credit - Rule 10 - transfer of second unit to the first unit - Held that:- When Rule 10 was invoked, we have perused the legislative intent appearing in Rule 10(1) of the Cenvat Credit Rules, 2004 dealing with the cases of shifting of units from one site to another site and also the occasions of merger/amalgamation/lease or transfer of the factory to a joint venture permitting Cenvat credit to be utilised. In between these two situations, we notice both the situations appearing in law have their own independent existence and speak for themselves. Ld. DR argues that the factory as a whole need to be shifted. This appears to be an absurd proposal and shall make the rule unworkable. It is elementary principle of law that the interpretation which fosters the legislative intent should be preferred to the interpretation of law which brings chaos - Decided in favour of assessee. Issues:1. Transfer of Cenvat credit from one unit to another.2. Interpretation of Rule 10 of the Cenvat Credit Rules, 2004 regarding shifting of units.3. Applicability of Cenvat credit in cases of non-workability of units.Analysis:1. The Appellant argued that the second unit was transferred to the place of the first unit for proper functioning after it became non-viable. The plant and machinery were shifted with intimation to Excise authorities. The unutilized Cenvat credit of the second unit was brought to the record of the first unit for utilization. The Appellant contended that there was no mala fide intention as the transfer was duly informed to the authorities. Referring to previous Tribunal decisions, it was highlighted that in cases of non-workability of units, the shifting of a unit does not disentitle an Assessee from availing unutilized Cenvat credit. The Adjudicating Authority did not find any wilful contravention of the law in this regard.2. The Departmental Representative (DR) contended that the shifting of a unit is only permissible under specific events outlined in Rule 10 of the Cenvat Credit Rules, 2004. It was argued that the Appellant did not meet the criteria for permissible shifting, leading to the denial of Cenvat credit rights.3. The Tribunal examined the evidence presented by both parties and delved into the legislative intent behind Rule 10 of the Cenvat Credit Rules, 2004. Rule 10(1) addresses the shifting of units from one site to another, as well as scenarios like merger, amalgamation, lease, or transfer of the factory to a joint venture, allowing for Cenvat credit utilization. The Tribunal noted the independent existence of these situations in the law and emphasized that the interpretation of the rule should align with legislative intent to avoid chaos. The argument that the entire factory needed to be shifted for Cenvat credit utilization was deemed absurd, and the Tribunal favored an interpretation that supported legislative intent.4. Based on the above analysis, the Tribunal opined that the Appellant should not face undue hardship and waived the requirement of pre-deposit during the pendency of the Appeal. This decision was made to prevent any unnecessary financial burden on the Appellant while the case was being reviewed.