Custom, Excise & Service Tax Tribunal
M/S. Tejas Network Ltd vs Cce, Puducherry on 26 August, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI E/40461 - 40462/2014 (Arising out of Order-in-Original No. 01/2014 (C) dated 13.1.2014, passed by the Commissioner of Central Excise, Puducherry). M/s. Tejas Network Ltd. : Appellant Vs. CCE, Puducherry : Respondent
Appearance Shri Ragavan Ramabhadran, Adv.
For the applicants Shri B. Balamurugan, AC (AR) For the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Honble Shri P.K. CHOUDHARY, Judicial Member FINAL ORDER No. 41049-41050 / 2015 Date of Hearing/Decision: 26.08.2015 Per: R. Periasami Both the appeals are taken up together for disposal as the issue is arising out of common Order-in-Original.
2. The brief facts of the case are that the appellants are registered with Central Excise for manufacture of Multiplexers and parts thereof falling under Chapter Heading 85 of the First Schedule to the CETA85 through their two units namely Thavalakuppam (Unit-I) and Uruvaiyaru (Unit-II). Both the units have been manufacturing excisable goods and availing Cenvat credit for payment of duty. With effect from 01.04.2012, Rule 10A was inserted in CCR, 2004 vide Notification No. 18/2012-CE (NT) dated 17.03.2012.
3. In view of insertion of Rule 10A of CCR, 2004, on 31.05.2012, Unit-II transferred their SAD credit balance of Rs.6,37,53,414/- to Unit-I under the cover of Delivery Challan (i.e. transfer challan). Show Cause Notice dated 30.05.2014 was issued to both the units proposing to deny irregular transfer of cenvat credit of Rs. 6,37,53,414/- from Unit-I and to recover the amount along with interest and also to impose penalty on both the units. The adjudicating authority confirmed the recovery of Rs.6,37,53,414/- along with interest and penalty of Rs.3,00,000/- on Unit-I. There is a further penalty of Rs.3,00,000/- on Unit-II. Hence the present appeals.
4. The Ld. Advocate appearing on behalf of the appellant submit that Unit-II had Cenvat credit availed on ASD during the period 08-10. He submits that was defunct since April, 2011 and no manufacturing activity was carried out. However, credit of Rs.6.37 Crores remains in the account balance as unutilized. He further submits that Rule 10A was inserted by Notification No. 18/2012-CE (NT) dated 17.03.2012 where specific provision has been introduced for transfer of AED (SAD) from one unit to other unit. It came into effect from 01.04.2012 with the condition that proper entry for such transfer should be maintained under Rule 9 and such transfer should take place under transfer challan issued by the transferee unit to the other unit. In view of the amended rule, they have transferred the unutilized credit on 31.05.2012. He further submits that the SCN issued for denial of unutilized credit only on the ground that the documents were not a valid one under Rule 9. No other allegation was made in the SCN. The Commissioner in the impugned order in para-11 A, para 11.2 A, B,C clearly accepted that the appellants have complied both the conditions of the Notification. However, the adjudicating authority rejected such transfer on different ground that they have prematurely transferred the credit in May, 2012 itself instead they should have taken at the beginning of the quarter ie. 01.07.2012. He submits that the amended Rule has the prospective effect and they have transferred the credit after the Rule came into force only from 01.04.2012. The question of premature transfer does not arise as this will apply for prospective transfer of credit for every quarter. He also submits that they have not utilized the entire credit and approximately Rs. 25 crores only was utilized as on 01.07.2012.
5. On the other hand, the Ld. AR on behalf of the Revenue reiterated the findings in the impugned order and also submits the appellants have not followed the conditions prescribed under the Notification and they have transferred the last credit amount taken two years before, which is not permissible under Rule 10A of CCR.
6. We have carefully considered the submissions by both sides and perused the records. The short issue involved in this case relates to transfer of unutilized credit from one unit to other unit as per the provisions of Rule 10 A. For proper appreciation it is relevant to reproduce Rule 10A.
Rule 10A: Transfer of CENVAT credit of additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act.
(1) A manufacturer of producer of final products, having more than one registered premises, for each of which registration under the Central Excise Rules, 2002 has been obtained on the basis of a common Permanent Account Number under the Income-Tax Act, 1961 (43 of 1961), may transfer unutilized CENVAT credit of additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, lying in balance with one of his registered premises at the end of a quarter, to his other registered premises by-
(i) making an entry for such transfer in the documents maintained under rule 9:
(ii) issuing a transfer challan containing registration number, name and address of the registered premises transferring the credit and receiving such credit, the amount of credit transferred and the particulars of such entry as mentioned in clause (i), and such recipient premises may take CENVAT credit on the basis of the transfer challan:
7. We find that the adjudicating authority at para 11,11.2, A, B, C of the impugned order has dealt the issue in detail and came to the conclusion and held that there is no dispute on the eligibility of transfer of unutilized credit under Rule 10A of CCR and held that the appellants complied the conditions of the notification. Only ground on which it was denied is that whether such transfer of credit can be only after 01.07.2012 i.e. at the beginning of the quarter as stipulated in the notification. We find that Rule 10A which is self-contained provision introduced for transfer of credit of AED (SAD) and it has prospective effect. Once it is came into effect from 01.04.2012, transfer of unutilized credit from one unit to other unit is automatically permissible and the Rule also specifies that such transfer should takes place at the end of the quarter, which is in our opinion has prospective effect and only permissible at the end of a quarter. In the present case, as seen from the records, unit-II which was defunct and the credit remained unutilized was correctly transferred on 31.05.2012, immediately after introduction of Rule on 01.04.2012, as they are eligible to transfer the same from 01.07.2012. Even though they have transferred the credit on 31.05.2012, they have not utilized the entire credit and only Rs. 25 Crores was utilized before 01.07.2012. The said Rule 10A came into effect from 01.04.2012 and the credit which was already accumulated and remained unutilized prior to the amendment rightly can be transferred after 01.04.2012. In view of the above, we hold that the appellants are eligible for transfer of unutilized credit from unit-II to Unit-I and the transfer of the credit done by the appellant is in conformity with the provisions of Rule 10A, which was specifically introduced only for this purpose relating transfer of unutilized credit availed on SAD (AED). The appellant is not liable for any penalty. Accordingly, the impugned order is set aside and both the appeals are allowed.
(Order dictated and pronounced in the open Court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
BB
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