Cenvat credit transfer on amalgamation allowed despite prior consumption of inputs and absence of physical stock

Unutilised Cenvat credit standing in a transferor's account on amalgamation could be transferred to the transferee even though the inputs had already been consumed and were not physically in stock. The Tribunal read Rule 57AF of the Central Excise Rules, 1944 as permitting transfer of only the unutilised credit in these facts and rejected the Revenue's insistence on physical transfer of the inputs themselves. Treating Rule 57AF as pari materia with the earlier Rule 57F(21), it followed its prior ruling that such credit transfer was allowable despite prior consumption of the inputs. The Commissioner's permission to transfer the credit was upheld and the Revenue's appeal failed.

---

---

Issues: Whether unutilised input duty credit lying in the transferor's Cenvat account could be transferred to the transferee's account on amalgamation even though the inputs had already been consumed and were not physically available in stock at the time of transfer.

Analysis: The relevant provision under Rule 57AF of the Central Excise Rules, 1944 was read as permitting transfer of credit in the factual situation before the Tribunal. The condition urged by Revenue, requiring physical transfer of the inputs themselves, was not accepted. The Tribunal followed its earlier decision on similar facts and treated Rule 57AF as para materia with the erstwhile Rule 57F(21), under which transfer of only the unutilised credit had been allowed despite prior consumption of the inputs by the transferor.

Conclusion: The Commissioner was competent to permit transfer of the unutilised credit from the transferor's account to the transferee's account. The Revenue's appeal failed and the order allowing transfer was sustained.

---