Tribunal grants Cenvat Credit without prior permission under Rule 10(3)

The Tribunal allowed the appeal, holding that the appellant was entitled to avail Cenvat Credit for unutilized funds in the account of a company taken over by them. The Tribunal found that Rule 10(3) of the Cenvat Credit Rules 2004 did not require prior permission to avail the credit, as long as the transfer of credit was accounted for to the satisfaction of the authorities. Since the appellant had duly informed the department, filed regular ER returns, and the credit was accepted by the authorities, the Tribunal ruled in favor of the appellant, granting them the Cenvat Credit.

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Issues:
Appeal against denial of Cenvat Credit for unutilized account takeover.

Analysis:
The appellant appealed against the denial of Cenvat Credit for unutilized funds in the account of a company taken over by them. The appellant took over the business of the company by agreement dated 10.02.2011, effective from 01.12.2012, and sought registration in their name. The concerned inspector visited the factory and verified the records, granting registration. The appellant filed regular ER-1 returns showing the available Cenvat Credit from the previous company. However, a letter was issued later to deny the credit, leading to a show cause notice demanding duty, interest, and penalty, which was confirmed through adjudication.

The appellant argued that Rule 10 of the Cenvat Credit Rules 2004 applied to their case. They contended that as per Rule 10(3), they were entitled to take the credit as they had intimated the department about the available credit through ER returns and the inspector had verified the evidence. The appellant claimed that the letter dated 05.03.2012 should be considered as seeking permission to take the credit, which they had already utilized. They emphasized that Rule 10(3) did not mandate seeking permission before availing the credit, citing relevant tribunal decisions to support their stance.

On the contrary, the Ld. AR supported the impugned order denying the credit. After hearing both parties, the Tribunal examined Rule 10(3) of the Cenvat Credit Rules 2004, which did not explicitly require prior permission to avail Cenvat Credit. The rule stated that credit transfer is allowed if inputs or capital goods are transferred along with the factory or business premises, and the credit is accounted for to the satisfaction of the authorities. Since the appellant had informed the department, filed regular ER returns, and the credit was accepted by the authorities, there was no need for prior permission to avail the credit.

In light of the above analysis and following the precedent set by the tribunal in similar cases, the Tribunal held that the Cenvat Credit was indeed available to the appellant. Consequently, the appeal was allowed with any necessary consequential relief.

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