Customs, Excise and Gold Tribunal - Tamil Nadu
C.C.E. vs Smithkline Beecham Consumer Health ... on 6 November, 2006
Equivalent citations: 2008[11]S.T.R.446
ORDER P.G. Chacko, Member (J)
1. In this appeal of the department, the challenge is against the permission granted by the Commissioner (Appeals) to the respondents for transfer of input-duty credit lying unutilized in their unit at Bangalore as on the date of closure thereof, to their new unit at Chengalpet. The amount of credit allowed to be so transferred is Rs. 37,23,609/-.
2. After examining the records, we note that the plant and machinery in the Bangalore unit was shifted to Chengalpet in August - September 1994. At that time, input-duty credit of Rs. 18,35,018/- was lying unutilized in RG23A Part II account of the Bangalore unit. Input-duty credits totalling to about Rs. 18.00 lakhs had, by then, been transferred from the Rajamundry unit of the appellants to the Bangalore unit. Thus the total input-duty credit lying unutilized in the Modvat account of the Bangalore unit, at the time of transfer of credit from that unit to the Chengalpet unit was Rs. 37,23,609/-. The Chengalpet unit took the credit and utilized it for payment of duty on final product, whereupon the original authority having jurisdiction over them asked them to reverse the credit under Rule 57(1) of the Central Excise Rules, 1944. The appeal filed by the party against the denial of credit was allowed by the Commissioner (Appeals). Hence the present appeal of the Revenue.
3. From the records it appears that the Commissioner of Central Excise, Bangalore having jurisdiction over the erstwhile Bangalore unit of the appellants had permitted transfer of the above credit to the Modvat account of the Chengalpet unit in terms of Rule 57F(7) of the Central Excise Rules, 1944 as applicable to the relevant period. A copy of letter dated 26-8-97 of the Assistant Collector, Bangalore, wherein the decision of the Commissioner was communicated to the party has been produced by learned Counsel today. The said letter reads as under:
Gentlemen, Sub : Central Excise - Transfer of credit - amounting to Rs. 37,23,609/- M/s. Smithkline Beecham Consumer Health Care, Bangalore-Reg.
-o-o-o-
Please refer to your letters ISG:BS dated 27-3-96 and letter dated 22-10-96/4-11-96 on the above subject.
2. With reference to above, it is to inform you that the Commissioner of Central Excise, Bangalore has accorded permission for transfer of credit of Rs. 37,23,609/- to you as per 57E Certificate dated 16-10-95 issued by the Superintendent of Central Excise, Range - II, Rajamundry, to your packing station at Chennai, as you have shifted your plant and machinery of Bangalore to Chennai, in terms of Rule 57F(7) of the Central Excise Rules, 1944 applicable during the relevant period.
Yours faithfully, Sd/-
(VIDHYADHAR N.THETE) ASSISTANT COMMISSIONER
4. Learned SDR submits that the objection of the department is not against the above transfer of credit from Bangalore to Chengalpet but against its utilization at Chengalpet. This submission is based on Sub-rule (21) of Rule 57F of the Central Excise Rules, 1944, which reads as under:
(21) The credit under Sub-rule (20) shall be allowed only if the stock of inputs as such or in process is also transferred along with the factory to the new site or ownership and the inputs on which credit has been availed of are duly accounted for to the satisfaction of the Commissioner.
In the face of this argument of learned SDR, learned Counsel for the respondents submits that the inputs on which credit had been availed at Bangalore had been duly accounted for to the satisfaction of the Commissioner at Bangalore and therefore the requirement of physical transfer of stock of inputs from the old factory to the new one under Sub-rule (21) stood fulfilled. While learned SDR relies on the Tribunal's decision in the respondents' own case, , learned Counsel would point out that the said order of the Tribunal was subsequently rectified and the claim of the appellants was allowed as per order dated 2-1-2002 . After reading the Tribunal's decision as modified in , we find that input-duty credits totalling to Rs. 18.00 lakhs were held to be transferable from the Rajamundry unit to the Bangalore unit of the company. It appears from the records that this credit is part of the total amount of credit involved in the present appeal. The question now arising for our consideration is whether this total credit on inputs, which was lying unutilized at Bangalore on the date of transfer of credit to Chengalpet unit permitted by the Commissioner (Bangalore) was available for utilization at Chengalpet for payment of duty on final product. On this issue there are two decisions of learned Single Members of this Tribunal, cited before us by learned Counsel, which are as follows:
(i) Aar Any Products Pvt. Ltd. v. CCP, New Delhi
(ii) Final Order No. 386/05 dated 4-3-2005 2005 (191) E.L.T. 660 (T) in Appeal No. E/1061/2003/MAS Commissioner of Central Excise v. Dr. Reddy's Laboratories Ltd.
5. In the case of Aar Any Products Pvt. Ltd. (supra), a factory was shifted from one place to another and, on that ground, transfer of input-duty credit was allowed though there was no physical stock of inputs at the old premises at the time of transfer. In the case of Dr. Reddy's Laboratories Ltd. (supra), transfer of input credit was allowed from the Modvat account of M/s. American Remedies Ltd. (ARL) to that of Dr. Reddy's Laboratories Ltd., though the credit-availed inputs were not available in stock at ARL's premises even at the time of amalgamation of the companies. These decisions support the respondents' case. We have also found substance in the Counsel's submission that the inputs in question had been duly accounted for to the satisfaction of the Commissioner of Central Excise, Bangalore and that it was upon such satisfaction that the Commissioner allowed transfer to the Modvat credit, account of the Chengalpet unit. The case of the Revenue that, for utilization of the transferred credit at Chengalpet, the inputs should have been physically received in that unit from Bangalore would lose ground. In other words, the department cannot any longer object to such utilization of the credit by the Chengalpet unit, on the strength of Sub-rule (21) of Rule 57F.
6. In the result, the impugned order is sustained and this appeal is dismissed.
(Dictated and pronounced in open Court)