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

 

[YAGAY andSUN]

As per the Budget 2012, CENVAT credit needs to be reversed on the movement of capital goods from one unit to another unit.

AI Summary

CENVAT credit reversal required on movement of capital goods between units, altering intra company transfer accounting obligations. The core operative point is that CENVAT credit claimed on capital goods must be reversed on movement of those goods between manufacturing units in different excise jurisdictions pursuant to Budget 2012, even though Rule 10 of the Cenvat Credit Rules permits transfer of unutilized credit only when the factory is transferred due to change in ownership, sale, merger, amalgamation, lease, or transfer to a joint venture with transfer of liabilities, conditions not satisfied by a simple intra company relocation.