CENVAT credit transfer to successor upheld where dissolved firm's assets and liabilities were taken over and no express bar existed.

CENVAT credit standing in the statutory records of a dissolved partnership firm was held transferable to the successor entity that took over the firm's assets and liabilities, because Rule 57F(21) of the Central Excise Rules, 1944 did not bar such transfer. The Tribunal also rejected the objection that alleged under-valuation of goods made the credit non-transferable, noting that no legal provision was shown to support that restriction. The stated principle is that, absent an express statutory prohibition, credit carried in the records of the old unit may be transferred to the successor.

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Issues: (i) whether CENVAT credit lying in the books of a dissolved partnership firm could be transferred to the successor entity taking over its assets and liabilities; (ii) whether credit reflected in the statutory records could be denied transfer on the ground of alleged under-valuation of goods.

Issue (i): whether CENVAT credit lying in the books of a dissolved partnership firm could be transferred to the successor entity taking over its assets and liabilities.

Analysis: Rule 57F(21) of the Central Excise Rules, 1944 did not prohibit transfer of credit in such a situation. The successor had taken over the assets and liabilities of the dissolved firm, and the Tribunal relied on the earlier view that credit standing to the account of the old unit could be carried forward by the successor.

Conclusion: Yes. The transfer of CENVAT credit was permissible and was rightly allowed.

Issue (ii): whether credit reflected in the statutory records could be denied transfer on the ground of alleged under-valuation of goods.

Analysis: The credit was available in the statutory records of the dissolved firm. No provision was shown to support the proposition that such credit became non-transferable merely because it was said to arise from under-valuation. In the absence of a legal bar, the objection was rejected.

Conclusion: No. The alleged under-valuation did not make the credit non-transferable.

Final Conclusion: The appeal was rejected and the order allowing transfer of credit to the successor entity was sustained.

Ratio Decidendi: Where a successor takes over the assets and liabilities of a dissolved unit, CENVAT credit standing in the statutory records is transferable unless the governing rules expressly prohibit such transfer.

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