No reversal of Cenvat credit on inputs in case of slump sale of on-going factory along with raw materials, packing materials etc., as there is no “removal” from factory
In the instant case, Hindustan Lever Ltd. (the Respondent) sold their manufacturing unit along with raw material, semi-finished goods etc., to M/s Bon Ltd. (the buyer)by way of slump sale compromising of sale of land, building, raw materials, packing materials and work in progress stocks.
The Department confirmed the demand along with interest and penalty on the Respondent in respect of inputs and semi-finished goods transferred to the buyer on the ground that the said inputs were not used by the Respondent in the manufacture of the final product and the same was removed to the buyer.Hence they are required to reverse the Cenvat credit availed on such inputs sold as such.
The Hon’ble CESTAT, Mumbai held that there was slump sale of on-going factory and the buyer has removed the input lying in the factory with payment of duty.
Therefore, Cenvat credit on inputs was not required to be reversedby the Respondent as there is no removal from the factory.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Email: firstname.lastname@example.org)