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CX - As lessee had not transferred business to appellant, provision of Rule 10 of CCR, 2004 not complied with - credit rightly denied: CESTAT

By TIOLNews Service

NEW DELHI, OCT 04, 2017: M/s MOUND Trading Co. Pvt. Limited had obtained the premises in question on lease basis and also obtained the capital goods from M/s Parle Products Pvt. Limited on lease basis.

The lessor gave an undertaking that M/s Mound Trading Co. Pvt. Limited is their job worker and they will use the capital goods and will be entitled to take cenvat credit on capital goods and inputs.

As M/s Mound Trading Co. Pvt. Limited did not find it viable to continue, they discontinued their business and surrendered the registration certificate. Since they were a job worker of M/s Parle Products Pvt. Limited, the premises were taken over by M/s Parle Products Pvt. Limited and cenvat credit on capital goodsetc. was availed.

SCN was issued to deny cenvat credit alleging that the appellant had contravened the provisions of Rule 10 of CCR, 2004.

The demand was confirmed and, therefore, the appellant is before the CESTAT.

It is submittedby the appellant that as M/s Mound Trading Co. Pvt. Limited was the lessee, therefore, they are the owner of the goods and appellant were actual user of the goods;that appellant had undertaken all the assets and liabilities of M/s Mound Trading Co. Pvt. Limited , therefore, they have correctly availed cenvat credit.

The AR informed the Bench that M/s Mound Trading Co. Pvt. Limited had surrendered their registration certificate and in these circumstances, the appellant is not entitled to avail cenvat credit.

In the letter, it is mentioned -

"This has reference to our letter dated 18/07/08 wherein we have requested to you that we did not want to carry on our manufacturing activity after 31st July, 2008. In other words we will keep continue our manufacturing activity upto 31st July 2008. Now we would like to inform you that due to some packing material i.e. lying in stock like wrapper that cannot be utilised or sale because of printing of company name on the wrapper. This wrapper cannot be utilised by owner company. It's a legal bounding of P.F.A. so we will utilise this wrapper and will surrender our Registration certificate on date 05/08/08 and we will submit original Registration certificate on our before 05/08/08.

As we know on or after 05/08/08 M/S PARLE BISCUITS PVT. LTD., NEEMRANA want to carryon it's manufacturing activity in the same premises.

If we are to observe any other formality in this regard please advise us. Your guidance is most welcome.

This is for your kind information please."

The Bench extracted the contents of rule 10 of CCR, 2004 and observed -

++ As per the said Rule if a manufacturer shifts his factory to another site, the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture, in that circumstances, cenvat credit can be transferred.

++ As M/s Mound Trading Co. Pvt. Limited has not transferred their business to M/s Parle Biscuits Pvt. Limited , in that circumstances, the provision of Rule 10 of Cenvat Credit Rules, 2004 have not been complied with. Therefore, the appellant is not entitled to avail cenvat credit on work in process, on capital goods and inputs of M/s Mound Trading Co. Pvt. Limited .

Holding that there is no infirmity in the impugned order, the same was upheld and the appeal was dismissed.

(See 2017-TIOL-3580-CESTAT-DEL)


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