2023 (12) TMI 520 - AT - Central Excise

Tribunal Allows Transfer of Unused Cenvat Credit Post-Factory Closure, Citing Precedents for Justification.

The Tribunal set aside the impugned order, allowing the appeal and permitting the transfer of unutilized cenvat credit despite the factory's closure. The ... Rejection of request of the appellant to transfer unutilized cenvat credit - closure of factory - Rule 10 of CCR 2004 - HELD THAT:- The appellant vide letter dt. 15.12.2011 intimated the department that their Puducherry unit is being closed down and that they intend to transfer the unutilized cenvat credit to Sriperumbudur, Kanchipuram District - The very same issue was considered by the Hon’ble High Court of Madras in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. FEATHERLITE PRODUCTS PVT. LTD. [2017 (6) TMI 814 - MADRAS HIGH COURT]. The assessee in the said case had requested for transfer of assets, stocks as well as cenvat credit from Hosur unit to their unit at Bangalore, after closure of the factory situated at Hosur. The Hon’ble High Court after considering the Rule 10 of CCR 2004 observed Thus, having regard to the purpose behind the rule, which is, broadly, to enable an assessee to use unutilised Cenvat credit, we see no difficulty in holding that an assessee will be able to transfer his unutilised Cenvat credit, even in a situation, where he shifts his factory from one site to another. The decision of Hon’ble High Court of Madras in the case of M/s. Feartherlite Products Pvt. Ltd. was appealed by the Department before the Hon’ble Supreme Court. The appeal was dismissed by the Hon’ble Supreme Court in [2018 (7) TMI 614 - SC ORDER] - The Hon’ble Apex Court observed that there are no grounds to interfere with the order passed by the Hon’ble High Court. The decision of the Hon’ble jurisdictional High Court being affirmed by the Hon’ble Supreme Court, ratio of the judgment is squarely applicable. The rejection of request to transfer unutilized cenvat credit owing to closure of factory, is not justified. The impugned order is set aside - Appeal allowed. Issues Involved:The issue in this case is whether the rejection of the request to transfer unutilized credit in a situation of closure of a factory is legal and proper under Rule 10 of CCR 2004.Comprehensive details of the judgment for each issue involved:1. Issue: Request for transfer of unutilized cenvat credit in the case of closure of factory. - The appellant, engaged in manufacturing Centralised Airconditioning Equipment, intended to close down one unit and transfer assets and liabilities to another unit. - The adjudicating authority rejected the request for transfer of unutilized cenvat credit. - The Commissioner (Appeals) upheld the rejection, leading the appellant to file an appeal before the Tribunal. - The Ld. Counsel argued that closure of the factory should not preclude the transfer of unutilized cenvat credit, citing Rule 10 of CCR 2004. - The Tribunal reviewed past decisions, including the case of CCE Chennai Vs Featherlite Products Pvt. Ltd., and concluded that the rejection of the transfer request was not justified. - The Tribunal referenced the decision of the Hon'ble High Court of Madras, which was affirmed by the Hon'ble Supreme Court, supporting the transfer of unutilized cenvat credit in cases of factory closure. - Ultimately, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any.2. Decision: - The rejection of the request to transfer unutilized cenvat credit owing to the closure of the factory was deemed unjustified. - The Tribunal followed the precedent set by the Hon'ble High Court of Madras and the Hon'ble Supreme Court, allowing the transfer of credit even in situations of factory closure. - The appeal was allowed, and the impugned order was set aside, providing consequential relief, if applicable.