Transfer of Cenvat Credit Unit I to Unit II

[Ramesh M]

Dear Experts,

We have one unit at Hyderabad and another one is at Rajasthan. From Hyderabad we use to do regular sales on payment central excise duty and using cenvat credit, from Rajasthan we have exempted product sales under Nil rate of central excise duty, but we receiving credit since it is mega power plant supplies.

We accumulating​ cenvat credit in Rajasthan Unit, but we are unable to set off since all products and sales are exempted, in this circumstances, can we transfer cenvat credit from Rajastan Plant to Hyderabad Plant, is there any option ? Kindly suggest...

[Rajagopalan Ranganathan]

Sir,

You can transfer the credit along with the inputs only and you cannot transfer the credit alone without transferring the inputs to your Hyderabad Unit.

[DR.MARIAPPAN GOVINDARAJAN]

I agree with the views expressed by Shri Rajagopalan Ranganathan.

[Ganeshan Kalyani]

This implies that if an input is used for manufacturing exempted goods, then the cenvat cannot be tranfered to the unit manufacturing taxable goods. Rule 12A(4) of CCR, says ''A large taxpayer may transfer, CENVAT credit available with one of his registered manufacturing premises or premises providing taxable service to his other such registered premises''. the word taxable is important here in this rule.

AI Summary

Cenvat credit transfer: credit cannot be moved alone; only transferable with inputs or between premises providing taxable activity.
CENVAT credit accumulated at a unit manufacturing exempted goods cannot be transferred alone to another unit; transfer is allowed only when the related inputs are physically transferred or when a large taxpayer transfers credit between registered premises that provide taxable manufacturing or taxable services, thereby requiring both sending and receiving premises to be engaged in taxable activity.