OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, DIVISION-III,AHMEDABAD-I, FLOOR, CENTRAL EXCISE BHAVAN, OPP. GOVT.

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1 d OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, DIVISION-III,AHMEDABAD-I, FLOOR, CENTRAL EXCISE BHAVAN, OPP. GOVT. POLYTECHNIC COLLEGE, AMBAWADI, AHMEDABAD trram g-1- MT/By R.P.A.D. 4./F. No. Ch. 32/3-68/Kaveri/2012 3iT 2r E r FIT/Date of Order: cmcli *1- Ra/Date of Issue: wr Etta/Passed by : Shri V. A. Prasad, Assistant Commissioner, Central Excise, Division- III, Ahmedabad-I rip 3it2r fir - ORDER IN ORIGINAL NO. MP/06/DEM/AC/ 2012 (5. f r ai-pczn.) i c t, 3 c44,dci tnifixr 5. t./ This copy is granted free of charge for private use of the person(s) to whom it is sent. $7r.3it2T 3{47 cr),..q14, Tra-2T3-TRA-M( 3PfrO), tft -zt 6rqic, 2.1c-ch, 2.10-ch graa-, Olt ate, aft-c-4va, 3*d-wsric, M-1" ui ru 5'.V.? a1 artfmt/ 3ruftR. tr&-m7 un- 31Ta-21* atatif 3r2T-OT sico gki 1,41H 0c) tt 6. Ci :i13 it-h1 a oii41 ViTr/ En- T. R ffr wit(r/ Any person deeming himself aggrieved by this order may appeal against this order in form EA-1 to the Commissioner (Appeals), Central Excise, 7 th Floor, Central Excise Bhavan, Near Polytechnic, Ambawadi, Ahmedabad The Appeal must be filed within 60 days from the date of receipt of this Order by post or by party. It should bear Court fee stamp of Rs.2-00 only. 6rt) afrit Trzit a1 crr-k-cr utraera -r-jr vrt-7/ 3-4:r t--- Rr 3(-L4K 7. (31t-6-) f- 4,1-iici(41, 2 0 o? Pqd-I 3 t 3u fllai (R) a1 Fo-'1'41te - giii clic) vrt-kr/ $-Trt Trrzr syiiq/ The appeal should be filed in EA-1 in duplicate. It shall be signed by the Applicant/s specified in sub-rule (2) of Rule 3 of the Central Excise (Appeals) Rules, It shall be accompanied with the following: e. 3Tcri-ff f5 of ( fr 31-itu crre4ftr witv ftwt er) azit 3t-b 3-11t21-3 i cr (.4) 31-a2ZT eidll 0G-11 1Tit-Cr/ A copy of the accompanied Appeal and two copies of the decision of which one - shall be Certified copy of the Order against and the other copy of the Order, which must bear Court fee stamp of Rs Subject : Show Cause Notice issued under F.No. Ch. 29/3-68/Kaveri/Dem/12, dated to M/s. Kaveri Industries, Plot No. 1/5636, Phase-II, GIDC, Vatva, Ahmedabad- Order- in-original - issued - Regarding.

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3 BRIEF FACTS OF THE CASE M/s. Kaveri Industries, Plot No.I/5636, Phase-II, G.I.D.C. Vatva, Ahmedabad (hereinafter referred to as "the said assessee"), are engaged in the manufacture of Organic Chemicals, classifiable under Chapter 29 of the Central Excise Tariff Act, 1985, for which, they are holding Central Excise Registration No.AAIFK3764BEM It appeared that the said assessee, prior to obtaining the Registration No. AAIFK3764BEM002, i.e. upto , were doing manufacturing activities at the premises situated at Plot No.429, GIDC, Vatva, Phase-II, Ahmedabad , under the Central Excise Registration No.AAIFK3764BXM001, which was surrendered by them on The said assessee, had applied on for the new registration for the premises, situated at Plot No.1/5636, Phase-II, G.I.D.C. Vatva, Ahmedabad and obtained the said Registration No.AAIFK3764BEM002, under Rule 9 of the Central Excise Rules, During the course of scrutiny of the monthly return filed in the form ER-1 by the assessee having Central Excise Registration No. AAIFK3764BXM001 [old premises], for the month of April 2011, it is observed that they had shown the finished goods quantity Kgs. [4-Sulpho Hydrozone] & 3.83 Kgs. [5-Sulpho Hydrozone] as cleared without showing any assessable value and duty payable. They had also debited amount of Rs.16,678/- lying in their Account Current and they had also shown debit of duty from CENVAT Credit account to the tune of Rs.83,791/- in CENVAT, Rs.1595/- in Additional duty, Rs.1675/- in Edu.Cess and Rs.836/- in SEC Accounts. The registrant at old premises had also put a remark in "remark section" of the ER-1 for the month of April-2011 that "TRANSFER OF FINISH GOODS, EXCISE DUTY NEW ADDRESS & ECC NO. AAIFK3764BEM002 DATED 11/4/2011 ". 5. Further, during the course of scrutiny of the monthly return, filed in the form ER-1 of the noticee at new premises holding Registration No. AAIFK3764BEM002, for the month of April 2011, it was observed that the said assessee had shown the opening balance of the finished goods quantity Kgs. [4-Sulpho Hydrozone] & 3.83 Kgs. [5-Sulpho Hydrozone]. Furthermore, they had also mentioned Opening Balance of Rs.16678/- in their account current and taken the Cenvat credit in the opening balance as Rs in CENVAT, Rs.1595/- in Additional duty, Rs.1675/- in Edu.Cess and Rs.836/- in SEC Accbunts. It also appeared that they had utilized the said Cenvat credit towards payment of C,Ex. duty on clearance of goods. 6. It appeared that the said assessee had transferred the CENVAT credit total of Rs.87,897/- [Rs.83,791/- in CENVAT duty, Rs.1,595/- in Additional duty, Rs.1,675/- in Educ. Cess and Rs.836/- in SEC Accounts ] as opening balance in the month of April-2011 to the newly registered unit shifted from old premises Plot No The Rule 10 of the CENVAT Credit Rules, 2004, which is relevant to the present case, is as under:- Rule 10. Transfer of CENVAT credit. - (1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of

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5 2 change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory. (2) If a provider of output service shifts or transfers his business on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business. (3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise. 8. It appeared that the said assessee had failed to obtain the permission from the Jurisdictional Assistant Commissioner, as envisaged under Rule 10 of Cenvat Credit Rules, 2004, regarding transfer of the stock of inputs as such, in process, stock of finished goods, capital goods and availment of CENVAT credit lying unutilized in the old premises having RC No.AAIFK3764BXM001 to the satisfaction of proper officer and thereby violated the provisions of Rule 10 of the CENVAT Credit Rules, It, therefore, appeared that the Cenvat Credit amounting to Rs.87,897/- (Rupees Eighty Seven Thousand Eight hundred Ninety Seven only) was liable to be recovered from the assessee under the provisions of Section 11A of the Central Excise Act, 1944 read with Rule 14 of the CENVAT Credit Rules, All these acts of contravention appeared to constitute offences of the nature and type as described in the Rule 15 of the Cenvat Credit Rules, 2004, in as much as they have wrongly availed and utilized the Cenvat Credit of Rs.87,897/- in their CENVAT Credit account. It further appeared that all the goods cleared utilizing the said wrongly taken Cenvat credit shall also be liable to confiscation and the assessee had rendered themselves liable for penalty under the provisions of Rule 15(1) of the Cenvat Credit Rules, It also appeared that the interest at the applicable rate was also recoverable from them under Section 11AA of Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, A Show Cause Notice, dated , under F.No.CH.29/3-68/Kaveri/Dem/12, was issued to M/s. Kaveri Industries, Plot No. 1/5636, Phase-II, G.I.D.C., Vatva, Ahmedabad

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7 , by the Assistant Commissioner, Central Excise, Division-III, Ahmedabad-I, asking them as to why :- (i) The Cenvat Credit amounting to Rs.87,897/- (Rupees Eighty Seven Thousand Eight hundred Ninety Seven only) should not be disallowed and recovered from them under the provisions of Section 11A of the Central Excise Act, 1944 read with Rule 14 of the CENVAT Credit Rules,2004; (ii) Interest at the applicable rate should not be charged and recovered from them under section 11AA of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004, (iii) Penalty should not be imposed on them under Rule 15(1) of the CENVAT Credit Rules, DEFENCE REPLY 12. A letter from the assessee was received on , whereby they informed the Department regarding shifting of their factory to new premises, transfer of Raw Materials and finished goods. DISCUSSION AND FINDINGS : 13. The assessee was given opportunities for personal hearing on , , , and Shri Sanjay Patel, Partner of M/s.Kaveri Industries and Shri Hasmukhbhai Mehta, Consultant, appeared on and submitted a letter dated , wherein they requested for permission to allow the transfer of Cenvat Credit to the books and account of new unit, which was not taken by them earlier, at the time of the transfer of their factory to new premises. They also requested to condone the lapse and drop the proceedings initiated against them. They reiterated the same also in the hearing. 14. I have carefully gone through the case records, evidences available and submissions made by the assessee. I observe that M/s.Kaveri Industries, while working at the old premises at Plot No.429, Phase-II, GIDC, Vatva, was having C.Ex. Registration No.AAIFK3764BXM001 upto The same was surrendered on They obtained new registration No.AAIFK3764BEM002, on , for the new premises at Plot No.I/5636, Phase-II, GIDC, Vatva, Ahmedabad. I notice that the said assessee, at new premises, in the monthly return for April 2011, had shown the opening balance of their finished goods, balance of Account Current of Rs.16,678/-, opening balance of Cenvat Credit of Rs.83791/- Rs.1595/- in Additional duty, Rs.1675/- in Edu.Cess and Rs.836/- in SEC Accounts. I notice that the said assessee have taken the above credit as balance and utilized the same towards payment of C. Ex. duty on clearance of goods. I find that the said assessee had transferred the stock of inputs/ finished goods/ Capital Goods/ Accounts Balance lying unutilized, of their old registrant unit to the new one, without intimating/ taking permission, as required under the Rule 10 of the Cenvat Credit Rules, 2004.

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9 4 15. Rule 10 of the CENVAT Credit Rule, 2004, mentions about the manner of transfer of CENVAT credit as under : Rule 10. Transfer of CENVAT credit. - (1) If a manufacturer of the final products shifts his factory to another site or 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 with the specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory. (2) If.business. (3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise. 16. I notice that the said assessee failed to inform/ apply to the proper officer regarding the transfer of the stock of inputs as such, in process, stock of finished goods, capital goods and Cenvat Credit unutilized in old premises and availed the said Cenvat Credit total amounting to Rs.87,897/- and utilized for clearance of the finished goods from their new premises. I find that they have applied for new Registration at the changed premises which was duly verified by the jurisdictional Range Superintendent, AR-IV and also certified the ground plan. 17. A verification report was also called for from the jurisdictional range officer regarding the transfer of the Cenvat Credit. The Range Officer has informed that the assesses account has been regularized. I find that it is a procedural lapse. I also refer the judgement of the Tribunal reported in 2010(260)E.L.T.261(Tri.-Ahmd.) in the case of M/s.Flex Art Foil Pvt. Ltd. Vs. CCE, Daman, wherein it was mentioned that provision of Rule 10 of the Cenvat Credit Rules provides for availment or transfer of credit without seeking any permission from Central Excise authorities. The Hon'ble Tribunal Held "No formal permission required from Central Excise officers Denial of credit not justified". As per Para 3 of the said Tribunal order, it was ordered that "the Tribunal decisions in the case of Hewlett Packard (I) Sales (P) Limited (211) E.L.T. 263 (Tri.-Bang.) = 2007 (6) S.T.R. 155 (Tribunal) and Solaris Biochemicals Limited (179) E.L.T. 216 (Tri.-Mumbai), in which case, under identical circumstances, the Tribunal has held that such transfer of credit lying unutilized with the previous firm, in case of amalgamation or sale of factories, is available with the new firm without any permission from the competent authorities". However, as in

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11 5 transfer of credit, I hold the assessee liable to pay a penalty under Rule 15(1) of CENVAT Credit Rules, 2004, and refrain from the recovery of Cenvat Credit under Section 11A of Central Excise Act, 1944, read with Rule 14 of Cenvat Credit Rules, 2004 and allow the transfer of the Cenvat Credit on the goods were duly accounted for. I also hold that the interest is not recoverable from the assessee under Section 11AA of Central Excise Act, 1944, read with Rule 14 of the Cenvat Credit Rules, Thus, in the light of the above findings, I pass the following order : ORDER I drop the proceedings initiated against M/s.Kaveri Industries, Plot No.I/5636, Phase-II, GIDC, Vatva, Ahmedabad , for the reason as narrated above, however, I impose a penalty of Rs.500/-(Rupees Five hundred only), under the Rule 15(1) of the CENVAT Credit Rules, ASAD) Assistant Commissioner Central Excise, Division-III, Ahmedabad-1 BY REGISTRED POST A.D. F.No.Ch.29/3-68/Kaveri/Dem/12 Ahmedabad: 30/08/2012 To M/s. Kaveri Industries, Plot No.I/5636, Phase-II, GIDC, Vatva, Ahmedabad Copy to: (1) The Commissioner of Central Excise (The Deputy Commissioner, R.R.A Section, Hqrs.,) Ahmedabad-I. (2) The Superintendent, Central Excise, Range-IV, Division-III, Ahmedabad-I. Guard File.

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