permission required for availing credit in terms of Rule 10 of Cenvat Credit Rules, 2004?

PJ/Case Laws/2010-11/1011

Case: Flex Art Foil Pvt. Ltd v/s Commissioner of C. Ex., Daman

Citation: 2010 (260) ELT 261 (Tri. – Ahmd)

Issue:- Whether permission required for availing credit in terms of Rule 10 of Cenvat Credit Rules, 2004?

Brief Facts:- Partnership firm under the name of M/s Sushmit Packaging was converted into a Private Limited under the name M/s Flex Art Folio Pvt. Ltd. As there was accumulated Modvat credit lying with the earlier unit, the new unit in terms of provisions of Rule 10 of the CCR, 2004 took the credit and informed the Revenue.

Audit objection was raised that such credit could not be availed suo motu. The appellant reversed the same. Subsequently, they realized that in terms of Rule 10 no permission is required, they accordingly again reversed the debit entry and took the credit.

Revenue objected to the same and issued show cause notice to the appellant. The Lower Authorities held that such suo motu re-credit was not permissible and demanded interest in respect of suo motu re-credit. Revenue had relied upon the Larger Bench decision in the case of BDH Industries Limited v/s CCE, (A), Mumbai [2008 (229) ELT 364 (Tri.–LB)] wherein it was held that for every refund an assessee is required to file a claim for the same with the Central Excise Authorities. The appellant therefore filed the appeal before the Tribunal.

Appellants Contention:- Appellants referred to provisions of the Rule 10 and submitted that they provided for availment or transfer of credit without seeking any permission from Central Excise Authorities. As such, it was not a case of suo motu refund.

Appellant relied upon decision in the case of Hewlett Packard (I) Sales (P) Limited [2007 (211) ELT 263 (Tri.–Bang.)] and Solaris Bio-chemicals Limited [2005 (179) ELT 216 (Tri.–Mumbai)] wherein under identical circumstances, the Tribunal has held that such transfer of credit lying unutilized with the previous firm, in case of amalgamation or sale of factories, is available with the new firm without any permission from the competent authorities.

Respondent’s Contention:- Revenue submitted that even if the stand of the appellant is correct, admissibility of the credit on merit has not been adjusted by the Lower Authorities, as the credit stands confirmed without going into the merits.

Reasoning of Judgment:- The Tribunal held that no formal permission is required from the Central Excise officers in terms of Rule 10. As such, denial of credit on this ground was not justified.

Tribunal accordingly, set aside the impugned orders. However, as admissibility of credit on merits has not been adjudged by the Lower Authorities, for this purpose, matter is remanded back to decide this issue on merits.

Decision:- Appeal allowed accordingly.

Comments:- The Tribunal has agreed with the fact that no permission is required for taking credit under Rule 10.

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PJ/Case Laws/2010-11/1011

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