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Shifting of factory

Kumar (MD) (30 Points)

18 August 2016

We had shifted our manufacturing unit from one location to a nearby premises. Both the units fall under the same Central Excise Division but the range changed from Range 1 to 2. WE have transferred the unutilised credit of Cenvat and PLA from the old range account to the new range account after due verification . While I have no doubt about the transfer of the CENVAT credit, i would like to know if the rules permit transfer of the PLA balance in this manner.

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3 Replies

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 19 August 2016

Dear Kumar,

On your query, i would like to highlight rule-10 of Cenvat Credit Rules-2004, which says and I quote,

If a manufacture of the final product or provider of output services shifts his factory to another site or if 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 transferred of liability of such factory.

Then the manufacturer or provider of service shall be allowed to transfer the Cenvat credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgmated factory only if the stocksbof inputs (as such or in process), or the capital goods, is also transferred along with the factory to the new site or ownership and the inputs or capital goods, on which credit has been availed of are duly accounted for the satisfaction of AC/DC.

Therefore, credit can be transfer provided you satisfy- the condition that
a) All stock including WIP is being transferred
b) It should be duly accounted under the satisfaction of jurisdictional AC/DC.

Hope, above information serves your purpose.

Kumar (MD) (30 Points)
Replied 19 August 2016

Hi Sunil , thank you for your reply. I am clear about the provisions of Rule 10 for transfer of Cervantes credit. I am specifically asking regarding the PLA account where I had a balance of Rs 1.0 lakh and have transferred it to the PLA account of the new ECC registration. Kindly advise. Regards

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 29 August 2016

Hi Kumar,

Apology for delay !!

I tried to find the solution with some backing but, i am have not found any specific legal back. But still for me it is allowable.