Transfer of Cenvat Credit from One Unit to another Unit

[Ramesh Totla]

Fact of the Case:-

1. Location of Factory i) Cuddlore (Tamilnadu): Manufacturing of Porcelain Insulators

                                       ii) Madurangdgam (Tamilnadu) : Manufacturing of Silicon Insulator.

2. We have taken Excise registration for both units  separately. Range and Division for both units is different but 'commissioner ate' is same.

3. We have taken service tax registration for unit I only and registration process  for unit II  is going on.

4. Due to Bad market of Polymer Insulator we are unable to sell the manufactured product. Hence we are not adjusting the Cenvat Credit on Input, capital Goods and Input services lying at unit II.

5. At unit I we are manufacturing porcelain insulator regularly and selling for which excise duty is payable after adjusting the Cenvat credit available at Unit I.

6. At Unit I we have also an Independent EHV Lab which are doing testing for In-house and outsourcing. On this service company has to pay service tax collected from outsiders.

 

Issues:

1. Can we transfer the Cenvat Credit (on Inputs, Capital Goods) available at Unit II to unit I without removing the goods from Unit II?

2.  Can we transfer the Cenvat Credit (on Input services) available at Unit II to unit I for adjusting against the service tax Payable?

3. Can we adjust our Service tax Payable on testing services at Unit I against the Cenvat Credit of Inputs used in Manufacture of Porcelain Insulators?

4. If we take Centralized registration for both units can it will affect the Adjustment of Cenvat credit Scenario.

[YAGAY andSUN]

If you are registered under LTU then you can transfer the CENVAT credit without transferring the R/M, Inputs and Capital Goods.

[R MUTHURAJ]

Dear Mr.Ramesh,

My answers to your questions are as under:

1. Can we transfer the Cenvat Credit (on Inputs, Capital Goods) available at Unit II to unit I without removing the goods from Unit II? Yes it is possible, you have to get registered with Large Taxpayer Unit (LTU), Chennai and then you can simply transfer the credit available from one unit to another by a transfer voucher.

2.  Can we transfer the Cenvat Credit (on Input services) available at Unit II to unit I for adjusting against the service tax Payable?Yes as per the Rule No.7 of Cenvat Credit Rule, 2004 it is possible to adjust the credit available in one unit to another unit by raising on Distribution Invoice with some conditions.

3. Can we adjust our Service tax Payable on testing services at Unit I against the Cenvat Credit of Inputs used in Manufacture of Porcelain Insulators? Yes.

4. If we take Centralized registration for both units can it will affect the Adjustment of Cenvat credit Scenario. It will not affect.

[Ramesh Totla]

Thanks 

AI Summary

Transfer of cenvat credit permitted between units via LTU registration and distribution invoice; service tax can be adjusted accordingly. Transfer of Cenvat Credit between separately registered units is permitted under LTU registration without moving inputs or capital goods by using transfer vouchers; credit on input services can be reallocated by issuing a distribution invoice, allowing adjustment of service tax liabilities at the receiving unit. Centralized registration does not change these adjustment mechanisms.