Transfer of Cenvat credit upheld within LTU framework

The Tribunal allowed the appeals in a case concerning the transfer of cenvat credit within LTU jurisdiction. Despite initial issues with the Pune Unit's registration, the Tribunal upheld the appellants' right to transfer credit to other units under LTU after subsequent inclusion in the LTU consent letter. Emphasizing the procedural facilitation of LTU and citing a Bombay High Court decision, the Tribunal found no grounds to deny the credit transfer, rejecting the Revenue's technical objections. The impugned orders were set aside, affirming the appellants' entitlement to legitimately transfer available credit within the LTU framework.

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Issues:
Transfer of cenvat credit from one unit to another unit under LTU jurisdiction

Analysis:
The judgment dealt with two appeals concerning the transfer of cenvat credit from one manufacturing unit to another within the LTU jurisdiction. The appellants, engaged in manufacturing motor vehicle components, had two units - Surajpur and Sohna - and later started a unit in Pune. The issue arose when they sought to transfer cenvat credit from Pune Unit to the other two units. The Revenue contended that such transfers were permissible only after all units were duly registered with the LTU. The impugned orders denied the credit transfer, citing non-compliance with Rule 12A(4) of Cenvat Credit Rules, 2004.

The appellant argued that the eligibility of credit availed in their various units was not in dispute, and the issue pertained to the entitlement for credit transfer within the LTU framework. They contended that once the LTU consent was approved, all units fell under LTU jurisdiction, as per a Circular by the CBEC. The appellant's counsel also relied on a decision by the Bombay High Court, allowing credit transfer in similar circumstances.

The Revenue, represented by the Ld. AR, supported the lower authorities' findings, emphasizing that the credit transfer did not align with Rule 12A(4) as the Pune Unit was added to the registration only in September 2009.

After hearing both sides and examining the facts, the Tribunal focused on whether the appellants were justified in transferring credit from Pune Unit to other units under the LTU. The Tribunal noted that the Pune Unit was not initially part of the LTU consent letter due to its later establishment. However, upon subsequent inclusion in the LTU, the appellants transferred the credit after discussions and submission of a revised consent letter. Despite delays in the department's response, the Tribunal found no grounds to deny the credit transfer, emphasizing the overall scheme of LTU jurisdiction and the procedural facilitation it offered to taxpayers. Citing the Bombay High Court's decision, the Tribunal concluded that the Revenue's objections were overly technical and upheld the appellants' right to transfer legitimately available credit.

In the detailed analysis, the Tribunal found no violation of provisions or threat to revenue in the credit transfer process under LTU jurisdiction. Consequently, the impugned orders were set aside, and the appeals were allowed.

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