Transfer of unutilized Cenvat credit on lease requires no prior departmental approval under Rule 10.

Rule 10 of the Cenvat Credit Rules, 2002 permits transfer of unutilized Cenvat credit when a factory is transferred by lease, and no prior departmental approval is required. The note records that the lower appellate authority found the credit to be available in the lessor's account at the time of transfer and treated the credit taken on invoices relating to the lessor unit as unutilized credit covered by Rule 10. The lapse was regarded as technical, with no infirmity found in the orders of the authorities below.

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Issues: Whether, upon lease of a factory, the transferee could take the unutilized Cenvat credit lying in the lessor's accounts without prior permission from the department.

Analysis: Rule 10 of the Cenvat Credit Rules, 2002 permits transfer of unutilized Cenvat credit when a factory is transferred by lease, and does not prescribe any condition requiring prior approval from the authorities. The factual finding recorded by the lower appellate authority was that credit was available in the lessor's account at the time of transfer and the credit taken after 1-4-2003 on invoices relating to the lessor unit was to be treated as unutilized credit lying in the lessor's account under Rule 8 of the Cenvat Credit Rules, 2002. The lapse was treated as technical and no infirmity was found in the orders of the authorities below.

Conclusion: The transfer of the unutilized Cenvat credit was valid and the assessee was entitled to avail it without prior departmental permission.

Ratio Decidendi: Where a factory is leased and unutilized Cenvat credit is available in the transferor's account, Rule 10 of the Cenvat Credit Rules, 2002 allows transfer of that credit without any requirement of prior permission from the department.

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