Modvat credit survives a change in management where the same factory, inputs and finished goods remain unchanged.

Modvat credit already earned on specified inputs could continue to be utilised after a change in management of the factory, because the credit under Rule 57A and its utilisation under Rule 57F are linked to the same unit, the declared inputs and the specified finished goods. The decisive factor was whether the operations, goods manufactured and inputs brought into the factory remained unchanged. A mere change in management did not, by itself, extinguish credit already taken where the credit related to the same factory and the same notified products. The assessee was therefore entitled to avail the credit.

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Issues: Whether Modvat credit already taken in respect of inputs received in a factory can continue to be utilised after change of management of the unit.

Analysis: Under Rule 57A, Modvat credit is linked to specified inputs and finished products on the basis of a declaration by the manufacturer, and under Rule 57F its utilisation is related to the factory in which the inputs are received. The decisive consideration is whether the operations, goods manufactured, and inputs brought in remain the same in the concerned factory. A mere change in management does not, by itself, extinguish credit already earned where the credit pertains to the same unit and the same specified finished goods.

Conclusion: The change of management did not bar utilisation of the Modvat credit already taken, and the assessee was eligible to avail the credit.

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