Cenvat Credit Available on Books of Accounts on Transfer of Ownership, Rule 10 of CCR Applicable: CESTAT [Read Order]

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that Cenvat Credit is available on books of accounts on transfer of ownership and therefore Rule 10 of the Cenvat Credit Rules, 2004 (CCR) is applicable.

The issue in the present appeal by Revenue is whether the appellant is rightly entitled to cenvat credit which was available in the books of accounts of one Vivin Laboratories Private Ltd., as they have taken over the plant and machinery of the said company on outright sale basis, including transfer of land.

The Respondent intimated the Assistant Commissioner that entire Plant and Machinery was sold by Vivin Laboratories Pvt Ltd., to them vide letter along with tax invoice to that effect. The Assistant Commissioner obtained a verification report from the jurisdictional Range Officer (JRO). JRO also furnished a copy of the sale deed as proof of “change in ownership”.

As the conditions required appeared to be not met, the Assistant Commissioner, has rejected the permission to transfer of Cenvat credit to the new ownership.

The contention of M/s Matrix, the respondent is that the transfer of Cenvat credit should have been allowed on the basis of Range Officer report, which was called for by the Assistant Commissioner, is erroneous, as the subject Sale Deed and Invoices were not examined by Range Officer, at the time of sending the report.

Another important factor is the goods in question which are said to have been transferred, have in fact been sold under invoices by M/s Vivin Labs to M/s Matrix, on payment of Sales Tax, as such the said transaction, is governed by provisions of Rule 3 of CCR, 2004 and not governed by provisions of rule 10 of CCR, 2004.

A Two-Member Bench comprising Anil Choudhary, Judicial Member and A K Jyotishi, Technical Member observed that “Ee find that the Respondent is the successor owner of the factory of Vivin Laboratories, with its assets and liabilities (which is nil on date of transfer), due to change of ownership on account of sale. We also hold, Rule 3 of CCR is not applicable in the facts of the present case, as Rule 3 applies in case of ‘removal’ of capital goods. Here there is no removal, as the capital goods remained in the same factory/premises, and there is only change of ownership.”

“We hold that the respondent-assessee is entitled to take transfer of Cenvat Credit available in the books of the transferor – Vivin Labs, as per Rule 10 of Cenvat Credit Rules” the Bench concluded.

To Read the full text of the Order CLICK HERE

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