Merger approval date versus department notification date determines interest calculation on delayed Cenvat credit transfer

CESTAT Ahmedabad allowed an appeal regarding the relevant date for calculating interest on delayed transfer of Cenvat credit following a corporate merger. The tribunal held that when M/s. Britco merged with M/s. Hindustan Coca Cola Beverages Limited, the merger was approved by Delhi HC on 10.09.1999 but conveyed to the department on 20.10.1999. The tribunal determined that 20.10.1999 should be the relevant date for transfer of Modvat/Cenvat credit from RG23A and RG23C accounts, as this was when the department was formally informed of the merger, making it the appropriate date for calculating interest on delayed transfer as ordered by Gujarat HC.

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Issues Involved:
The issues involved in this case are the transfer of unutilized Cenvat credit on inputs and capital goods following a merger under the Companies Act, 1956, and the subsequent claim of interest for delayed approval of the credit transfer.

Transfer of Cenvat Credit:
The appeal pertained to the transfer of unutilized Cenvat credit on inputs and capital goods from M/s. Britco to the appellant following a merger approved by the Hon'ble Delhi High Court. The appellant had made multiple applications for the transfer of credit, which were initially rejected by the department. Subsequent legal proceedings and orders from the Hon'ble Gujarat High Court and the Commissioner led to the eventual approval of the transfer of Cenvat credit on capital goods to the appellant.

Claim of Interest for Delayed Approval:
The appellant claimed interest for the delay in approving the transfer of Cenvat credit, citing the delay in processing their applications and subsequent legal actions. The Commissioner initially rejected the claim of interest, citing the absence of a provision for interest under the Central Excise Act and Rules. However, the Hon'ble Gujarat High Court later set aside this decision and directed the department to calculate and pay the interest at a rate of 9% per annum for the delayed payment, along with an additional 6% simple interest per annum.

Judgment:
The Commissioner (Appeals) had rejected the appellant's claim for interest, stating that the relevant date for calculating interest should be after the formal approval of the merger by the Hon'ble High Court of Delhi. However, the Hon'ble Gujarat High Court's order specified the relevant date for calculating interest as the date when the department was informed of the formal merger, which was 20.10.1999. The Appellate Tribunal set aside the order-in-appeal and allowed the appeal, determining 20.10.1999 as the relevant date for calculating interest on the delayed transfer of Cenvat credit.

Conclusion:
The Appellate Tribunal's decision overturned the Commissioner (Appeals)'s rejection of the appellant's claim for interest and established 20.10.1999 as the relevant date for calculating interest on the delayed transfer of Cenvat credit, in accordance with the Hon'ble Gujarat High Court's order.

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