Transformers & Rectifiers India Limited VERSUS Commissioner of Central Excise & ST, Ahmedabad

EXCISE Appeal No. 10076 of 2020-SM

[Arising out of Order-in-Original/Appeal No AHM-EXCUS-002-APP-92-2019-20 dated

24.10.2019 passed by Commissioner ( Appeals ) Commissioner of Central Excise, Customs

and Service Tax-AHMEDABAD-II]

 

Transformers & Rectifiers India Limited

VERSUS

Commissioner of Central Excise & ST, Ahmedabad

APPEARANCE :

Shri M.G. Yagnik, Advocate for the Appellant

Shri Rajesh K Agarwal, Superintendent (AR) for the Revenue.

CORAM:

HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)

DATE OF HEARING : 02.02.2023

DATE OF DECISION: 06.02.2023

FINAL ORDER NO. A/10207 / 2023

RAMESH NAIR :

In the present case the appellant was denied Cenvat credit by the

Revenue on the ground that Cenvat credit of other unit i.e. Moriya unit was

transferred to appellant’s unit before the due date and utilized the same for

payment of duty in terms of Rule 10A of Cenvat Credit Rules, 2004.

Shri M.G. Yagnik, learned Counsel appearing on behalf of the appellant

submits that even though there is procedural lapse of transferring credit

before due date but for the period between the credit was due and credit

was taken, the appellant have paid interest. Therefore, the Cenvat credit on

the appellant’s end should not have been denied. He submits that the issue

raised only on the basis of audit conducted at the transferor unit i.e. Moriya

and on the observation of audit, appellant had paid interest and the issue

was closed, therefore at the appellant’s end the Cenvat credit cannot be

denied. He further submits that if at all there is lapse, it is only on the part

of Moriya Unit who is transferor, for that reason appellant cannot be made

sufferer for the substantial benefit of Cenvat credit.

Shri Rajesh K Agarwal, learned Superintendent (AR) appearing for the

Revenue reiterates the findings of the impugned order.

I have carefully considered the submissions made by both the sides

and perused the record. I find that the lower authorities have denied Cenvat

credit on the challans issued for transfer of credit from their other unit at

Moriya to the unit of the appellant at Changodar. The reason for denial was

that credit was transferred two months before the period prescribed under

Rule 10A of Cenvat Credit Rules, which is reproduced below:-

RULE [10A. Transfer of CENVAT credit of additional duty leviable under sub-section (5)

of section 3 of the Customs Tariff Act. — (1) A manufacturer or producer of final

products, having more than one registered premises, for each of which registration

under the Central Excise Rules, 2002 has been obtained on the basis of a common

Permanent Account Number under the Income-tax Act, 1961 (43 of 1961), may transfer

unutilised CENVAT credit of additional duty leviable under sub-section (5) of section 3 of

the Customs Tariff Act, lying in balance with one of his registered premises at the end of

a quarter, to his other registered premises by—

(i)

making an entry for such transfer in the documents maintained under rule 9;

(ii)

issuing a transfer challan containing registration number, name and address of

the registered premises transferring the credit and receiving such credit, the amount of

credit transferred and the particulars of such entry as mentioned in clause (i),

and such recipient premises may take CENVAT credit on the basis of the transfer challan.

From the above Rule, the transferor assessee is required to transfer the

credit at the end of the quarter. In the present case, for the quarter ending

December 2013, instead of transferring credit on 31.12.2013, it was

transferred on 31.10.2013. Similarly for the quarter ending September

2014, instead of transfer of credit on 30.09.2014 it was transferred on 

31.07.2014. I find that there is no dispute that the credit which was

transferred was lying accumulated in the Cenvat account of transferor unit.

The transfer of credit from one unit to another unit of the same assessee

company in terms of Rule 10A is only a procedural requirement and it is not

a case of any fresh payment of duty. The credit which is transferred is in

respect of duty which was already paid. Therefore, by transfer of credit

there is no Revenue implication. Moreover, for the early transfer of credit

and availment thereof, the appellant has admittedly paid the interest due to

which the availment of credit shall be treated as on last date of the quarter

in both the cases. Therefore, only for early transfer, credit cannot be

denied.

Without prejudice to the above findings, I further find that if at all

there is lapse, it is on the part of the transferor unit against which the audit

had already raised the issue and on payment of interest the issue was

settled and no further action was taken against the transferor unit. For this

reason also Cenvat credit should not have been denied to the appellant.

As per my above discussion and findings, I do not find any reason that

in the facts and circumstances of the present case why the credit can be

denied. Accordingly, the impugned order is set-aside and appeal is allowed

with consequential relief.

(Pronounced in the open court on 06.02.2023)

(Ramesh Nair)

Member (Judicial)