Delay - Rule 10 Application Transfer of Cenvat

[Sandeep Soni]

Dear Expert,

Request to give your advice on below:

The proprietory firm business sale to New Company. All formatlities of old RC surrender & New RC Reg completed on 17.06.2013.Closing Cenvat of March 13 taken as opening ER-3 April to June with new company. This we have done without applying under Rule 10 for transfer of cenvat.

Till date we have not applied under Rule 10. Now Excise Superitendent has sent us letter as Scrutiny of ER-3 saying you have not taken permission under Rule 10 and CENVAT taken & utilised is liable for reversal.

Kindly advice how should I proceeds in this matter.

[YAGAY andSUN]

Rule 10, nowhere speaks about permission. It says inputs and capital goods should be accounted for to the satisfaction of the DC or AC.

 

Rule 10.  Transfer of CENVAT credit. - (1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory.

(2) If a provider of output service shifts or transfers his business on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business.

(3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise. 

[R MUTHURAJ]

Hi,

To support Mr.Pradeep views:

The rule has mentioned only to the satisfaction of the AC / DC. It means when they call for the details of cenvat credit taken evidencing credit documents, excise returns filed, etc., you have to submit and convince the concerned AC/DC.

 

Regards,

R.Muthuraj

AI Summary

Transfer of CENVAT credit requires accounting for inputs and capital goods to satisfy the tax authority before credit is accepted. Unutilized CENVAT credit may be transferred on sale or change of ownership only where inputs or capital goods are transferred and are accounted for to the satisfaction of the Deputy Commissioner or Assistant Commissioner; the rule requires verification and accounting rather than an express prior permission, and failure to satisfy the officer exposes claimed credit to reversal.