2023 (12) TMI 682

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....of its erroneous availment is assailed in this appeal. 2. Facts of the case, in a nutshell, is that Appellant partnership firm had taken over a proprietorship concern of one of the partners alongwith its assets and liabilities including unutilised CENVAT Credit available as closing balance of the proprietorship concern. The said CENVAT Credit of Rs.10,84,210/- was transferred on the basis of Rule, 10 of CENVAT Credit Rules, 2004 but objection was raised by the Department for non-compliance of sub-Rule 3 of Rule 10 that dictates that stock of inputs including those in process and capital goods are to be duly accounted to the satisfaction of the Deputy/Assistant Commissioner of Central Excise, which was apparently not done by the Appellant. ....

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....o a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business. (3) The transfer of the CENVAT credit under subrules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Exci....

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....ed for to the satisfaction of the Deputy/Assistant Commissioner. In the instant case, I find that the credit of Rs.10,84,210/- availed by the Noticee, which was lying unutilized in the account of the transferred proprietorship concern, pertains to input services only and not the inputs or capital goods, accounting of which is envisaged in the rule. This is borne out from the Chart below Para No. 9 of the Noticee's reply to the show-cause notice which is reproduced below for sake of clarity:- xxx 11.4 From the above chart, it is seen that the credit availed by the Noticee pertains only to input services and does not pertain to inputs or capital goods and since the rule does not require the input services should also be accounted for, t....

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....the transferor business unit. This being so, I find no irregularity in the order passed by the Adjudicating Authority and, therefore, the observation made by the Commissioner (Appeals) in para 15 of the order that Rule, 10(3) of the CENVAT Credit Rules, 2004 permits CENVAT Credit of inputs or capital goods alone to be transferred is not inconformity to the law. 5. Judicial decision on this issue is consistent from CESTAT up to the level of Hon'ble Apex Court that Rule, 10 does not require that Assessee can transfer the credit corresponding only to the quantum of inputs transferred to the new factory since it permits the Assessee to transfer the entire available credits alongwith inputs and capital goods in stock at the factory to the n....