1996 (4) TMI 328 - AT - Central Excise

Manufacturing unit merger maintains Modvat credit eligibility post-merger

The Appellate Tribunal CEGAT, MADRAS held that the respondents were eligible for the Modvat credit facility post-merger, as the manufacturing unit ... Modvat Issues involved: Eligibility of Modvat credit facility post-merger.Summary:The Appellate Tribunal CEGAT, MADRAS considered the issue of whether the respondents would be eligible for the Modvat credit facility after a merger between two companies. The Revenue did not dispute that the manufacturing unit continued to operate from the same location, producing the same goods with the same inputs post-merger, with the only change being legal ownership.The learned JDR argued that the respondents needed to obtain a separate Excise Licence under Rule 178(3) of the Central Excise Rules to avail of the Modvat credit. However, it was noted that despite this requirement not being fulfilled, the Department approved classification lists, price lists, and assessed monthly returns without objection.After considering the arguments, the Tribunal held that as long as the manufacturing unit remained unchanged and continued to produce the same goods from the same inputs post-merger, the existing declaration sufficed for Modvat purposes. The Central Excise authorities had accepted this situation post-merger, approving lists and returns without raising licensing concerns. Therefore, the Tribunal found no merit in the Revenue's appeal and dismissed it.