Order Date – 05 June 2023

Parties: M/s. Wipro Ltd. Vs Commissioner of GST & Central Excise

Facts – 

• The Appellant, M/s. Wipro Ltd., is engaged in the manufacture of hydraulic cylinders and pars. They are availing CENVAT credit on inputs, capital goods and input services. They had an EOU unit which was also engaged in manufacture of hydraulic cylinders.
• In 2007, the two units underwent a merger in accordance with the prescribed rules and procedures effectively consolidating into a single unit operating in the DTA. The appellant had transferred the CENVAT credit which was lying in EOU unit to their merged DTA unit.
• A show cause notice was issued alleging that as per sub-rule (3) of Rule 10 of CENVAT Credit Rules, 2004, only if the ownership of capital goods/ inputs are transferred to the other unit, the assessee would be eligible to have the credit transferred and such transfer of CENVAT credit is not legal and proper.
• The demand was confirmed along with interest and penalty.

Issue – 

• Whether the appellant can transfer Cenvat credit of EOU unit to DTA unit upon merger of the two units?

Order – 

• The Tribunal observed that there nothing in Rule 10 which disallows transfer of CENVAT credit in the manner alleged by department. So also there is no dispute that the credit availed by the EOU which has been transferred is ineligible.
• The very same issue was considered by the Tribunal in the case of Technocraft Industries which held that the statutory entitlement to regular monetization of the accumulated credit cannot be alienated; the alternative of utilization is not restricted by any condition. Denial of such utilization would have the impact of taxing the exporter as ultimate consumer and burdening the appellant with an implied duty on exports that is not authorized by law. To do so is an act illegality. 
• Following the ratio laid down by the judgments above, which is squarely applicable to the facts of the case, we hold that the demand cannot sustain. The impugned order is set aside. The appeal is allowed.