Modvat credit on change of ownership remained available where declaration was procedural and no revenue prejudice was shown.

Change in ownership of a manufacturing unit did not, by itself, defeat Modvat credit where the excise authorities had already been informed, the licence was amended, and the inputs, final products and manufacturing process remained unchanged. The fresh declaration requirement under Rule 57G was treated as procedural rather than substantive in these facts, and the later amendment to Rule 57F(7) did not control the earlier position. As no prejudice to revenue was shown, and the department's inconsistent treatment of PLA balance and Modvat credit supported the assessee, the successor was entitled to take and utilise the credit and denial was unsustainable.

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Issues: Whether, on change in ownership of a manufacturing unit, the successor was entitled to take and utilise Modvat credit despite the absence of a fresh declaration and fresh licence formalities.

Analysis: The unit had already intimated the excise authorities about the change in ownership and the licence was amended accordingly. The nature of the inputs, the finished products and the manner of manufacture remained unchanged, and the department was already aware of the material facts. In that setting, the requirement of a fresh declaration under Rule 57G was only procedural and did not amount to a substantive breach. The subsequent amendment to Rule 57F(7) was noted, but the absence of that express provision at the relevant time did not defeat the successor's entitlement where the change was only in ownership and no prejudice to revenue was shown. The inconsistent approach of allowing balance in the PLA while denying Modvat credit also supported the assessee's case.

Conclusion: The assessee was entitled to take and utilise the Modvat credit; denial of credit was unsustainable.

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