Cenvat Reversal incase of Capital goods transferred from one unit to another unit

[Vamsi Krishna]

We have 2 manufacturing units both in different locations both comes under the same company with respect to financials.

And we are planning to transfer move plant from one unit to another location to have a one unit location.

Both the units are having separate excise jurisdictions for the purposes of central excise registration.

Now the query is when i move my capital assets viz.plant & machineries & other assets the cenvat credit availed earlier shall be reversed ? If so on what grounds?

Rule no.10 of Cenvat credit rule says that ' 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' but in this case we dont have change in ownership/merger or any other sort of the thing mentioned above.

So i need clarification in this regard & refer the case laws if any..

 

Thanks

CA Vamsi Krishna.N

 

AI Summary

CENVAT Credit Reversal Required for Capital Goods Transfer Between Units with Different Excise Jurisdictions, Per 2012 Budget Rule 10. A company with two manufacturing units at different locations is considering transferring capital goods, such as plant and machinery, from one unit to another. Both units have separate excise jurisdictions. The query seeks clarification on whether CENVAT credit needs to be reversed during this transfer, as there is no change in ownership, sale, merger, or similar circumstances. According to Rule 10 of the CENVAT Credit Rules, credit can be transferred under specific conditions, but these do not apply here. The response indicates that, as per the 2012 Budget, CENVAT credit must be reversed when capital goods are moved between units.