Transfer of unutilized Cenvat credit on amalgamation allowed without prior permission where stock is duly accounted for.

Unutilized Cenvat credit remains transferable on merger or amalgamation under Rule 8, and prior permission from the competent authority is not a precondition for such transfer. The stock-transfer requirement under sub-rule (2) is satisfied where the inputs, work-in-process, or capital goods are also transferred and the credit-linked goods are duly accounted for to the Commissioner's satisfaction. The decision treats the earlier Modvat principle as continuing under the Cenvat scheme. On the facts recorded, the credit was allowable and the demand and penalty could not be sustained.

---

---

Issues: Whether Cenvat credit lying unutilized could be transferred on amalgamation without prior permission and whether compliance with the stock-transfer requirement under Rule 8(2) was satisfied so as to deny credit.

Analysis: Rule 8 permits transfer of unutilized Cenvat credit where the factory is transferred by merger or amalgamation. Prior permission from the competent authority is not a precondition for such transfer. The requirement under sub-rule (2) is that the stock of inputs, work-in-process, or capital goods must also be transferred and the inputs or capital goods on which credit was taken must be duly accounted for to the satisfaction of the Commissioner. The record showed that the stock stood duly accounted for and credit had already been permitted to be taken. The underlying principle recognized under the earlier Modvat regime was treated as applicable to the Cenvat scheme as well.

Conclusion: The appellants were entitled to the credit, and the demand and penalty could not be sustained.

Ratio Decidendi: On merger or amalgamation, unutilized Cenvat credit remains transferable without prior permission if the transferred stock and credit-linked inputs or capital goods are duly accounted for to the satisfaction of the Commissioner.

---