2018 (2) TMI 1307 - AT - Central Excise

Appeal allowed for M/s Raj Rayon Ltd. in CENVAT Credit case

M/s Raj Rayon Ltd. Versus Commissioner of Central Excise, Vapi

The appeal was allowed in favor of the appellant, M/s Raj Rayon Ltd., in a case concerning the denial of CENVAT Credit and penalty imposition for ... Transferring of entire CENVAT credit- closure of one unit - penalty u/r 15(1) of the CCR 2004 - denial of credit and imposition of penalty on the ground that they had taken the said credit without permission of the Central Excise officer in terms of Rule 10 of the CENVAT Credit Rules - Held that: - rule 10 has been examined by the Tribunal in the case of Hewlett Packard [2006 (11) TMI 76 - CESTAT,BANGALORE], wherein it has been clearly held that no prior permission is needed. In the said case, it has been held that as long as the importer has been accounted to the satisfaction of the department, the credit is transferable - credit cannot be denied. Credit in unit-III - Revenue view is that the credit in unit-III is doubtful in view of the fact that the appellant had opted for Notification No. 30/2004-CE and hence were required to reverse the credit in their account - Held that: - The said matter would be a different issue, which needs to be dealt with separately. This is not relevant in the present proceeding as the present proceeding relates to credit that was available in unit-III at the material time and if transfer of that credit was admissible or not. Appeal allowed - decided in favor of appellant. Issues:Appeal against confirmation of demand on reversal of CENVAT Credit and imposition of penalty under Rule 15(1) of the CENVAT Credit Rules, 2004.Analysis:1. The appellant, M/s Raj Rayon Ltd., appealed against the denial of CENVAT Credit and penalty imposition for transferring credit from unit-IV to unit-III without prior permission. The appellant argued that they followed Rule 10 of the CENVAT Credit Rules, 2004, by informing the authorities and providing necessary details for the credit transfer. They cited the case of Hewlett Packard (I) Sales (P) Ltd. Vs. Commissioner of Central Excise, Bangalore 2007 (211) ELT 263 (Tri-Bang) to support their claim that no prior permission was required for such transfers. The appellant contended that since the revenue did not verify the transfer despite being informed, they cannot now deny the credit.2. The Authorized Representative (AR) relied on the impugned order, highlighting irregularities in the transfer of unutilized credit from unit-II to unit-IV. The AR also raised doubts about the credit available in unit-III, stating that the appellant failed to reverse the CENVAT Credit as required under Notification No. 30/2004-CE. However, the Tribunal noted that the issues raised by the Revenue regarding incorrect credit in unit-II and doubts about credit in unit-III were not relevant to the current proceeding concerning the transfer of credit between unit-IV and unit-III. The Tribunal emphasized that the question of whether the credit in unit-III needed reversal should be addressed separately and was not pertinent to the present appeal.3. Upon reviewing Rule 10 of the CENVAT Credit Rules, 2004, the Tribunal found that no prior permission was necessary for transferring CENVAT credit as long as the transfer was accounted for to the satisfaction of the department, as established in the case of Hewlett Packard. Therefore, the Tribunal concluded that the appeal had merit, and the appellant's appeal was allowed.This comprehensive analysis of the judgment highlights the key arguments presented by both parties, the legal principles applied by the Tribunal, and the reasoning behind the decision to allow the appeal.