Modvat credit on factory takeover: transferee may use predecessor's credit where ownership changes and no fresh declaration is needed.

On a transfer of a factory by lease, takeover, merger or similar arrangement, the transferee may use the predecessor's Modvat credit because the transferee steps into the transferor's shoes for excise duty and credit purposes. Rule 57F(6) was confined to shifting of a factory to another location and did not govern a change in ownership or asset-and-liability transfer. The fresh declaration issue did not arise separately on the facts, since the original manufacturer had already filed the declaration and a further declaration by the transferee was held unnecessary.

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Issues: Whether, on transfer of a factory by lease or other takeover arrangement, the transferee manufacturer could utilise Modvat credit lying in the predecessor's account, and whether the question of filing a fresh declaration arose.

Analysis: Rule 57F(6) was confined to the limited situation of shifting of a factory to another location and did not govern a change in ownership or takeover of the factory through merger, amalgamation, or similar transfer of assets and liabilities. In such cases, the transferee steps into the shoes of the transferor for excise duty and credit purposes. The declaration issue did not arise separately because the original manufacturer had already filed the declaration and a fresh declaration by the transferee was held unnecessary on the facts.

Conclusion: The transferee was entitled to utilise the Modvat credit earned by the predecessor, and no separate question on fresh declaration survived for adjudication.

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