SHIEL INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE, DAMAN

JUDGEMENT

(1.) M /s. Disha Industries and M/s. Shiel Industries are proprietary firms owned by Shri Arun Choksi. Shri Arun Choksi decided that the manufacturing in M/s. Disha Industries would be terminated and for this purpose all the inputs and capital goods lying in the factory of M/s. Disha Industries were transferred to the factory premises of M/s. Shiel Industries and credit relating to the inputs and capital goods was also transferred for which department had not objected. However, the department objected to the transfer of unutilized credit of Rs. 9,74,895.69/ - and the lower authorities have demanded the credit taken by M/s. Shiel Industries and a penalty of Rs. 1,00,000/ - has also been imposed. As regards M/s. Disha Industries, the department has taken a stand that the unutilized credit lying in the account shall lapse and thus proceedings have culminated in two orders namely demand of Cenvat credit being the unutilized credit transferred by M/s. Disha Industries to M/s. Shiel Industries and an order requiring M/s. Disha Industries to write off the credit lying in the books (It may not be correct to say that it is lying in the books but once M/s. Shiel Industries pays the amount demanded, M/s. Disha Industries would be eligible to take back the credit) and by this order department is taking a stand that in the event of M/s. Shiel Industries paying back the duty demanded, M/s. Disha Industries cannot take the credit back.

(2.) HEARD both the sides. Learned advocate for the appellants submitted that the case is clearly covered by the provisions of Rule 10. In this case Shri Arun Choksi is the Proprietor of both the firms and therefore has to be treated as a manufacturer. Accordingly as per Rule 10, if a manufacturer of the final products shifts his factory to another site, the unutilized credit as well as credit on inputs/final products/capital goods can be transferred. He also submits that the Commissioner (Appeals) has erred in holding that M/s. Disha Industries and M/s. Shiel Industries are to be treated as two different manufacturers under Central Excise Law. Learned DR would rely upon the decision of the Tribunal in the case of Dunlop India Ltd. v. CCE, Madras reported in 1994 (74) E.L.T. 740 (Tribunal) to support his contention that the transfer of credit cannot be allowed when a single proprietor has two manufacturing units. I find that the decision cited by the learned DR is not applicable to the facts of this case since in that case it was a public limited company and the public limited company had simply transferred the credit from one unit to the other. In that case the question before the Tribunal was whether it was legally permissible for transfer of credit from one factory to another and the question was not whether such credit is transferable when there is a transfer of factory as it happens to be in this case.

(3.) PRIMA facie I find considerable force in the arguments advanced by the learned advocate that this is a case of a manufacturer shifting the factory from one place to another. The only problem or the issue that has been considered by the department is that he has chosen to give a different name to the new unit to which the inputs and capital goods were shifted. I find that the case is prima facie covered by the situation contemplated under Rule 10 of Cenvat Credit Rules, 2004 which provides for transfer of credit and transfer of unutilized balance when a manufacturer shifts a factory from one place to another. In view of the above, the stay petitions are allowed and stay against recovery of the amount demanded is granted during the pendency of appeal. The requirement of pre -deposit is also waived.