Modvat credit remains available after business takeover when input declarations are genuine and timely filed.

Modvat credit was admissible where an assessee took over a running business and the input declarations under Rule 57G had been filed by the predecessor unit or by the assessee and received by the department within time. The declarations for the raw materials were found genuine, the transfer of the entire business was accepted, and there was no change in manufacturing activity. On those facts, the basis for denying credit did not survive, and the demand could not be sustained.

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Issues: Whether Modvat credit was admissible where the assessee had taken over a running business and the relevant declarations under Rule 57G were filed either by the predecessor unit or by the assessee before the department.

Analysis: The declarations filed in relation to the raw materials were found to be genuine. The transfer of the entire business from the predecessor concern to the assessee was accepted, and there was no change in the manufacturing activity. Since the declarations covering the inputs had been filed before the take-over or were duly received by the department within the stipulated period, the basis for denying Modvat credit did not survive.

Conclusion: The Modvat credit was admissible to the assessee and the demand could not be sustained.

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