Transfer of unutilized CENVAT credit allowed on conversion of a factory without stock-based restriction on inputs.

Rule 10 of the CENVAT Credit Rules, 2004 permits transfer of unutilized CENVAT credit when a factory is transferred or its constitution changes, and the transferable credit is not confined to the value of inputs physically found in stock. The provision requires transfer of the available credit along with inputs and capital goods in stock, but does not impose input-wise correlation as a condition for migration of credit to the new entity. The Tribunal noted supporting precedent and accepted that the credit claimed existed. The Revenue's objection was rejected, and the credit was treated as transferable in full.

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Issues: Whether unutilized CENVAT credit could be transferred to the newly formed company on conversion of the factory into a company, even though the corresponding inputs were not available in stock to the extent claimed.

Analysis: Rule 10 of the CENVAT Credit Rules, 2004 permits transfer of the available credit along with inputs and capital goods in stock at the factory on transfer of ownership or change in constitution. The rule does not require that the transferable credit must be limited to the quantum of inputs physically available on the date of transfer. The Tribunal also noted that the same principle had been accepted in earlier precedent, and there was no dispute about the existence of the credit claimed.

Conclusion: The credit was transferable in full, and the Revenue's objection was rejected.

Ratio Decidendi: Rule 10 of the CENVAT Credit Rules, 2004 allows transfer of unutilized CENVAT credit on transfer of a factory or change in constitution without requiring input-wise correlation or restriction to the value of inputs physically available in stock.

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