Transfer of Excess Cenvat Credit

[Sandeep Aggarwal]

Continue with the previous issue, our manufaturing unit has been engaged in assembling which amounts to manufacture. The cenvat credit available on inputs is equivalent to 14%.( including additional duty). Further the excise duty payabe on finished product is 10%. The difference of 4% resulted into excess balance of Cenvat Credit which is lying unutilised in our books as we have trasferred our entire stock / finished goods and proportionate cenvat credit  has been transferred to our second manufaturing unit

We therefor want to utilise this excess balance of cenvat credit in our second unit. The maufacturing operations has already been terminated from Sep, 10.

Kindly advise me whther we can utilise this balance cenvar credit in our second unit.

[YAGAY and SUN]

Dear Sir,

 

The issue raised by you is related to inflated duty structure. You can't transfer it to other unit except in one condition that if you are registered as LTU.

Hope this will clarify your query.

Best Regards,

Pradeep Khatri

 

[Sandeep Aggarwal]

Thanks Mr. Pradeep

Kindly elaborate your point. Is there any way to utilise or get refund because otherwise it will be a revenue loss to assessee.

 

[kothapally Raji Reddy]

Sir,

Please see Rule 10 of Cenvat Credit Rules,2004 and find out for youself whether your case falls within that Rule.

[YAGAY and SUN]

Solution suggested by Mr. kothapally Raji Reddy will surely help you out.  But the basic question of inflated duty structure will surely irritate you as the Department may raise queries in this regard.

[Sandeep Aggarwal]

Thanks for your suggestion!!

I have read Rule 10 in detail  but my situation is different. Further  I have discussed that part in detail in my earlier querry. Please provide  your input while keeping into consideration my previous post.

 

Once again I am thankful to ALL..

AI Summary

Cenvat credit transfer limited: excess unutilised input credit generally not transferable except where registered as LTU.
Whether an excess Cenvat Credit arising because input credit (including additional duty) exceeds excise liability can be utilised at a second manufacturing unit is contested; advisers direct attention to the limits on inter unit transfer under the Cenvat Credit Rules, note an exception for registration as a LTU, and recommend considering refund or adjustment procedures while anticipating departmental queries about any inflated duty structure.