Modvat credit transfer on factory shift allowed where no input stock remained to be moved under the rules.

Modvat credit could not be denied merely because a factory was shifted when no stock of inputs or inputs in process remained at the old premises. Rule 57F(21) of the Central Excise Rules, 1944 was applied as a safeguard against double benefit, permitting transfer of credit only where relevant stock is moved to the new site. As nothing existed at the old premises to be transferred, the condition could not be used to defeat the claim. The transfer of Modvat credit was therefore admissible.

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Issues: Whether Modvat credit could be denied on shifting of factory premises merely because no stock of inputs or inputs in process was transferred to the new site.

Analysis: Rule 57F(21) of the Central Excise Rules, 1944 permits transfer of Modvat credit where the stock of inputs, including inputs in process, is transferred, and the provision is intended to prevent a double benefit by ensuring that credit is not shifted while inputs remain at the old premises. The rule cannot be extended beyond its object to deny transfer of credit when there was no stock of inputs at the old premises and nothing existed to be transferred. The absence of stock meant that the condition could not operate to defeat the claim for credit transfer.

Conclusion: The transfer of Modvat credit was held admissible and the assessee succeeded on this issue.

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