ORDER
Archana Wadhwa, Member (J)
1. As per facts on records, the appellants’ factory was merged with one M/s. trade Agencies on 18.3.2002 under agreement according to which all the assets and liabilities of M/s. Trade Agencies were to be transferred to the appellants. The appellants filed an application dt. 27.3.2002 for transfer to the unutilised cenvat credit lying with the account of M/s. Trade AGencies in terms of the provisions of rule 8 of CENVAT Credit Rules, 2001. It was the appellants’ contention hat the M/s. Trade Agencies was having cenvat credit of Rs. 32,48,279. 54 in RG-23A part -II register and of Rs.1,50,345.75 in RG-23C part-II register. Inasmuch as during the period May 1994 till March 1997 the said M/s. Trade Agencies were clearing their goods on payment of duty from PLA under the instruction of their range superintendent, the said cenvat credit got accumulated in their records, though the inputs were utilised by them. They also contended that M/s. Trade Agencies have paid an amount of Rs. 45,00,000/- from their PLA during the relevant period. Had this amount not been deposited in PLA and they were allowed to make debit entries from cenvat credit account, there would not have been so much of credit lying unutilised.
2. While adjudication the Commissioner observed that rule 8 of the said Cenvat Credit Rules, 2001 provides the facility of transfer of unutilised cenvat credit in case of merger. However, sub-rule 2 of the said rule stipulates that transfer of the cenvat credit under sub-rule 1 shall be allowed only if the stock of inputs as such or in the process or the capital goods is also transferred along with the factory to the new site or ownership and the inputs or the capital goods on which credit has been availed are duly accounted for to the satisfaction of the Commissioner. He has observed that the said conditions of transfer of input/capital goods has not been satisfied inasmuch as only 4 items were transferred along with merger and the invoices could not be submitted for all such transferred goods. Accordingly he allowed transfer of only Rs.25, 687/- to the appellant and disallowed the balance cenvat credit lying unutilised with M/s.Trade Agencies.
3. Shri S.R. Chakraborty, ld. consultant appearing for the appellant submits that rule 8 provides for transfer of the credit along with transfer of the inputs and the capital goods. Inasmuch as no unutilised inputs were lying, and hence were not transferred, it cannot be said that the credit would not be admissble for transfer. He submits that the Tribunal in the case of Aar Aay Products Pvt.Lt d. v. CCE, New Delhi – 2003 (157) ELT 40 (Tri.del.) has held that the when there is no physical stock of inputs, the transfer of credit cannot be disallowed on the ground that inputs have not been transferred. He submits that the said rule only submits transfer of the inputs along with the credit when the inputs are also available so as to deny the double benefit to the assessee. In a case where inputs are not available, it cannot be said that the credit would also not be transferred. Reference has also been made to the Bombay High Court’s decision in he case of Castrol India Ltd. v. UOI- 2003 (154)ELT 19 (Bom.).
4. WE have also considered the submissions made by Shri J. R. Madhiam, ld. JDR for the Revenue, who reiterates the reasoning adopted by the adudicating authority. Admittedly the inputs have been utilised by M/s. Trade Agencies and instead of utilising the credit earned on the said inputs, they paid the duty from their PLA during the period in question. It is on this account that cenvat credit got accumulated in their records. Rule 8 provides for transfer of the inputs along with the credit. However, if the inputs are not available, the rule cannot be pressed to the extent so as to deny the transfer of the credit. This has been held by the Tribunal in the above referred case of Aar Aay Products Pvt. Ltd. . Para 4 (four) of the said decision is reproduced below :-
4. Sub-rule (21) of the said Rule 57F envisages that the Modvat credit shall be allowed only if the stock of inputs including the inputs in process is also transferred. It is clear sub-rule (21) ensures that the credit alone is not transferred while some stock of inputs remains at the old premises by stipulating that the remaining stock of inputs is transferred to the new premises. It is sought to be ensured that no double benefit is given to the assessee by shifting a factory and the credit while leaving the inputs at the old old premisese. However, such a provision cannot be reasonably extended to deny transfer of credit when there is physically no stock of inputs at the old premises and there is nothing available to be transferred. Accordingly, it is felt that in the instant case, the appellants the entitled to transfer of the credit as they have no stock of inputs either as such or in process at the old premises. The appeal is allowed.
5. We also note that Bombay High Court in the case of Castrol India Observed as under :-
In our opinion the construction placed by the Petitioners on the said order dated 22nd September, 2000 is justified and from the said order it was evident that the Petitioners were permitted to transfer the unutilized credit balance from Mazgaon to Patelganga in accordance with Cenvat Rule 57AF (1) and (2) of the Central EXcise Rules, 1944. Even in the return the Respondents have not specifically denied the contention of the Petitioners that during January to March, 1998, the goods were cleared by the Petitioners on payment of duty without taking Modvat credit at the request of the Respondents. It appears that in view of he above facts, the Deputy Commissioner of Central Excise, Mumbai permitted the Petitioners to transfer the credit without there being transfer of inputs or manufactured goods. In that view of he matter no fault can be found with the Petitioners for transferring the unutilized Modvat credit and availing the same and they cannot be said to have contravened the provisions of Cenvat Rules 57AF (1) and (2) of the Central Excise Rules, 1944.
6. Inasmuch as the issue stands decided in favour of the appellant by the above referred decision we set aside the impugned order and allow the transfer of the credit of duty paid on the raw materials. As regards the transfer of the credit in respects of the capital goods it is transfer of the credit in respect of the capital goods it is seen that the Commissioner has observed that only few items of the capital goods were transferred and the appellant could not produce the duty paying documents for the same. The appellant on the other hand have contended that all the capital goods were transferred. For this purpose we remand the matter to the Commissioner for verification of the above factual position.
7. In view of the foregoing the appeal is partially allowed and partially remanded.
