Excise – Cestat Chennai: There is consensus ad idem to transfer the ownership along with assets and liabilities to the lessee unit - Thus, the rejection of the request to transfer Cenvat credit balance to the newly transferred unit is without any legal or factual basis – Appeal allowed [Order attached]
Order Date – 07 March 2023
Parties: M/s. Lakshmi Machine Works Ltd. Vs The Commissioner of GST & Central Excise
- The Appellant, M/s. Lakshmi Machine Works Ltd., were engaged in the manufacture of textile machinery and its parts. Consequent to their transfer of ownership of their unit to M/s. GKD ITR, Tooling Central Unit-II, the appellant applied for permission to transfer the entire unutilised cenvat credit to the newly transferred unit.
- Transfer the cenvat credit was denied on 21.08.2012.
- Whether transfer the entire unutilised cenvat credit to the newly transferred unit can be denied ?
- The Tribunal observed that on perusal of the agreement, it is a clear that intention between the parties to transfer the ownership of the machinery belonging to the appellant unit to the lessee unit. Such transfer is done along with transfer of raw materials, components, capital goods etc. which indicates that the lessee unit is put into the shoes of a manufacturer in the place of the appellant-company.
- Ongoing through the entire agreement, it is clear that there is consensus ad idem to transfer the ownership along with assets and liabilities to the lessee unit. Thus, the rejection of the request to transfer cenvat credit balance as per Rule 10 of CCR 2004 is without any legal or factual basis.
- The Department is directed to issue permission to the appellant unit to transfer credit to the lessee unit. The appeal is allowed.