Transfer of Credit in case of Closure of factory is permissible in terms of Rule 10 of CCR 2004: CESTAT [Read Order]

The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the transfer of credit in case of closure of a factory is permissible in terms of rule 10 of Comprehensive Credit Reporting (CCR), 2004.

The appellant is engaged in the manufacture of Centralised Airconditioning Equipment like Air Handling Units, Ductable Spit Air Conditioner, etc. They had two units of which one unit was situated in SIPCOT Industrial Estate, Mambakkam, Sriperumbudur, Kancheepuram District, and Unit II was situated in Kalitheerthalkuppam, Mannadipet Commune, Puducherry.

The appellant informed the department that they intend to close down the Puducherry unit and to transfer the assets and liabilities to their Sriperumpudur unit. The adjudicating authority rejected the request of the appellant to transfer unutilized cenvat credit. Aggrieved by such an order, the appellant filed an appeal before the Commissioner (Appeals) who upheld the rejection of a request to transfer the unutilized cenvat credit to the Sriperumbudur unit.

The counsel for the appellant submitted that the department has rejected the request for the transfer of unutilized cenvat credit holding that the above provision does not include the closure of the factory.The High Court of Madras has considered the very same issue in the case of CCE Chennai Vs Featherlite Products Pvt. Ltd. and held that the transfer of credit in the cases of closure of a factory is permissible in terms of Rule 10 of CCR 2004.

The Two-member bench comprising of Sulekha Beevi C.S. (Judicial member) and Vasa Seshagiri Rao (Technical member) held that the rejection of the request to transfer unutilized cenvat credit owing to the closure of the factory was not justified. Therefore, the impugned order was set aside and the appeal of the appellate was allowed.

To Read the full text of the Order CLICK HERE

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