Transferred Modvat credit remained usable at the new unit once proper accounting and permission for transfer were established.

Modvat credit lying unutilized in an old unit could be transferred to a new unit for duty payment where the jurisdictional Commissioner had permitted the transfer under Rule 57F(7) after being satisfied that the inputs were properly accounted for. Rule 57F(21) could not be used to deny utilisation of that transferred credit merely because the inputs were not physically received at the new site. The transferred credit was therefore validly utilizable at the new unit, and the Revenue's objection failed.

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Issues: Whether Modvat credit lying unutilized in the old unit could be transferred to the new unit and utilized there for payment of duty even though the inputs were not physically received at the new site.

Analysis: The transfer of credit had been permitted by the jurisdictional Commissioner under Rule 57F(7) of the Central Excise Rules, 1944 after the inputs were found to have been duly accounted for to his satisfaction. Rule 57F(21) could not be invoked to deny utilisation of the transferred credit at the new unit merely because the inputs were not physically received there, when the prerequisite accounting and permission for transfer had already been granted. The earlier decisions relied upon supported this view.

Conclusion: The transferred credit was validly utilizable at the new unit, and the Revenue's objection failed.

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