Transfer of Cenvat Credit

[Vardharajan Aiyangar]

Dear Sirs,

Our client has two factories manufacturing alloy steel castings. Unit -1 is in Maharashtra and Unit-2 is in Karnataka.

Unit-1 is now closed and some of the capital goods and stocks were transferred to the Unit-2, in mid 2016.

Unit-1 is having substantial cenvat credit as on today, Jan 2017.

Can such credits be transferred to Unit-2 and utilised for clearances from Unit-2??

Rule 10 states that transfer is possible.

Would like to know what is the procedure??

The company has a turnover of 60cr out of which 50% is for exports.

Request the honourable members to shed some light on this issue.

Thanks and Regards,

Vardharajan AV

[Ganeshan Kalyani]

To begin the discussion i would like you to refer Issue Id: - 3209 Dated: 22-7-2011.

[KASTURI SETHI]

Rightly advised by Sh.Ganeshan Kalyani, an expert. You can get refund also. There are so many case laws. Two case laws are appended below:-

2016 (6) TMI 314 - CESTAT CHENNAI Leo Oils & Lubricants Versus Commissioner of Central Excise, Chennai

2016 (8) TMI 293 - CESTAT BANGALORE M/s. Bangalore Cables P. Limited Versus Commissioner of Central Excise

Refund of unutilized CENVAT Credit on closure of factory is admissible - As LB decision relied on by Revenue did not consider High Court order allowing refund, same cannot be followed: CESTAT
 

 

AI Summary

Transfer of CENVAT credit permitted between units, or claim refund of unutilized credit on factory closure. Inter unit transfer of CENVAT credit from a closed factory to an operating unit in another State is permitted under the CENVAT rules and may be effected by following the prescribed transfer procedure; alternatively, unutilised CENVAT credit on closure can be claimed as a refund, a remedy supported by tribunal decisions affirming refund admissibility.