Tribunal orders transfer of cenvat credit to lessee unit under Rule 10 of CCR 2004.

The Tribunal directed the Department to permit the transfer of cenvat credit to the lessee unit, as per Rule 10 of CCR 2004. The appeal was allowed with consequential relief, if any, in accordance with the law.

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Issues:
1. Transfer of unutilized cenvat credit to a newly transferred unit denied by the department.
2. Interpretation of Rule 10 of Cenvat Credit Rules, 2004 regarding the transfer of cenvat credit in case of change in ownership.
3. Dispute over the permission to transfer the cenvat credit balance to the lessee unit.

Issue 1: Transfer of unutilized cenvat credit denied by the department
The appellants, engaged in manufacturing textile machinery, sought permission to transfer unutilized cenvat credit to a newly transferred unit, M/s.GKD ITR, Tooling Central Unit-II. The department denied permission, leading to an appeal before the Tribunal.

Issue 2: Interpretation of Rule 10 of Cenvat Credit Rules, 2004
The appellant relied on Rule 10 of Cenvat Credit Rules, 2004, which allows the transfer of cenvat credit in case of factory transfer due to change in ownership. The rule mandates the transfer of credit if inputs or capital goods are transferred along with the factory or business premises.

Issue 3: Dispute over permission to transfer cenvat credit to the lessee unit
The department denied transfer based on the absence of an express stipulation in the agreement for transferring all liabilities of the appellant-company to the lessee unit. However, the Tribunal found that the agreement clearly indicated the intention to transfer ownership, assets, and liabilities to the lessee unit.

The Tribunal analyzed Rule 10 of Cenvat Credit Rules, 2004, emphasizing the requirement of transferring inputs or capital goods along with the factory or business premises for cenvat credit transfer. The Tribunal noted that the agreement between the parties demonstrated a clear intention to transfer ownership, assets, and liabilities to the lessee unit. The Tribunal held that the rejection of the request to transfer the cenvat credit balance was unfounded, as the lessee unit effectively took over the manufacturing activities of the appellant-company.

In conclusion, the Tribunal directed the Department to permit the transfer of cenvat credit to the lessee unit, as per Rule 10 of CCR 2004. The appeal was allowed with consequential relief, if any, in accordance with the law.

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