Transfer of unutilised Cenvat credit on factory shift is allowed when inputs and capital goods are properly accounted for.

Rule 8 of the Cenvat Credit Rules, 2002 permits transfer of unutilised Cenvat credit when a manufacturer shifts its factory, provided the stock of inputs or capital goods is moved to the new site and duly accounted for to the satisfaction of the Commissioner. The text notes that departmental verification, transfer entries in the registers, and movement of inputs and capital goods supported compliance. It also states that the rule is not confined to the exact quantum of inputs physically shifted, but allows transfer of the available credit linked to the factory stock at the relocated unit. On that basis, the credit transfer was upheld and the departmental challenge failed.

---

---

Issues: Whether the assessee, on shifting its factory to a new site, satisfied the conditions for transfer of unutilised Cenvat credit under Rule 8 of the Cenvat Credit Rules, 2002.

Analysis: Rule 8 permits transfer of unutilised Cenvat credit when a manufacturer shifts the factory, provided the stock of inputs or capital goods is transferred to the new site and the inputs or capital goods on which credit has been taken are duly accounted for to the satisfaction of the Commissioner. The records showed transfer of inputs and capital goods to the new premises, verification by the departmental officers, and proper entry of the materials in the relevant registers. The rule does not confine transfer of credit only to the precise quantum of inputs moved, but allows transfer of the available credit linked with the factory stock at the transferred unit.

Conclusion: The assessee complied with Rule 8 and was entitled to transfer the unutilised credit; the Department's challenge failed.

Final Conclusion: The credit transfer on shifting of the factory was upheld, and the departmental appeal was rejected.

Ratio Decidendi: On factory shifting, unutilised Cenvat credit may be transferred if the inputs or capital goods are moved to the new site and duly accounted for to the satisfaction of the Commissioner.

---