MODVAT credit transfer on factory shift held not retrospective where amendment created a new substantive facility

MODVAT credit under the pre-amendment Rule 57F(6) was confined to the factory in which it accrued, so unutilised credit could not be transferred to another unit after shifting. The Tribunal held that a later amendment allowing such transfer created a new facility affecting substantive rights and could not be treated as clarificatory or applied retrospectively in the absence of clear statutory language or necessary implication. The earlier authority cited was distinguished because it concerned a procedural matter, not the carry-forward of accumulated credit on relocation. The claim for transfer of credit was therefore rejected.

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Issues: Whether MODVAT credit lying unutilised in one factory could be transferred to another factory after shifting of the unit, and whether the later amendment to Rule 57F(6) permitting such transfer was clarificatory and retrospective.

Analysis: The Tribunal held that the scheme of MODVAT, as it stood at the relevant time, operated within the confines of a particular factory and did not provide any flexibility for transfer of credit from one unit to another on shifting. Transfer of credit was treated as affecting the substantive right of the assessee to discharge duty liability, and an amendment introducing such a facility could not be read retrospectively unless the statute expressly so provided or such intention was unavoidable by necessary implication. The later amendment by Notification No. 28/88 was therefore not treated as merely clarificatory. The earlier decision relied upon was distinguished as dealing with a procedural aspect, not with transfer of accumulated credit on shifting of a factory.

Conclusion: The claim for transfer of MODVAT credit was rejected and the appeal failed.

Final Conclusion: The credit balance in the earlier factory could not be carried over to the shifted unit in the absence of an express statutory enabling provision at the relevant time, and the amendment introducing such transfer facility was not applied retrospectively.

Ratio Decidendi: An amendment conferring a new facility to transfer accumulated excise credit between factories affects substantive rights and is not retrospective unless the statute clearly so provides.

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