TRANSFER OF CENVAT CREDIT

This query is : Resolved

SANDEEP KUMAR SHAH (Querist)
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01 February 2011 ONE OF MY CLIENT WANTS TO DEMERGE ITS MANUFACTURING DIVISION TO ANOTHER COMPANY.

MY QUERY IS WHETHER CENVAT CREDIT BALANCE LYING IN RG 23A PARTII OF SAID MANUFACTURING DIV. IS ELIGIBLE TO BE TRANSFERED IN THE BOOKS OF RESULTING COMPANY (NEW OWNER.

WHAT IS FORMALITIES FOR THE TRANSFER.

Anand Agarwal

Anand Agarwal (Expert)
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02 February 2011 You can tranfer Cenvat credit...please refer Rule 10 of Cenvat Credit Rules, 2004.

Extract is reproduced here for easy reference:

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 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.