Rule 57H(3) credit transfer applies only to unutilised duty-paid inputs, not consumed materials in finished goods stock.

Rule 57H(3) permits transfer of duty credit only for duty-paid inputs or component parts received by a manufacturer and lying unutilised immediately before the Rule 57G declaration. Cut tobacco already consumed in manufacturing cigarettes does not qualify for transfer merely because the finished cigarettes remain unexported. The note distinguishes precedent on accrued Modvat credit, as no credit existed on unutilised stock here. On that basis, the transfer claim was rejected and the balance disallowance was maintained against the assessee.

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Issues: Whether credit of duty on cut tobacco already used in the manufacture of cigarettes could be transferred under Rule 57H(3) of the Central Excise Rules, 1944 when the finished cigarettes were lying unexported.

Analysis: Rule 57H(3) permits transfer only of duty-paid materials or component parts received by a manufacturer and lying unutilised immediately before the acknowledgement of the declaration under Rule 57G. The benefit is confined to manufacturers covered by the special procedure under Rule 56A or by an exemption allowing credit in respect of duty-paid materials or component parts used in finished excisable goods. The cut tobacco in question had already been utilised in the manufacture of cigarettes, and the claimed precedent on accrued Modvat credit was distinguishable because the present case involved no earned credit on unutilised inputs lying in stock.

Conclusion: The credit was not transferable under Rule 57H(3), and the disallowance of the balance amount was upheld against the assessee.

Ratio Decidendi: Transfer of credit under Rule 57H(3) is available only for duty-paid inputs or component parts that remain unutilised at the time of the Rule 57G declaration; credit cannot be claimed for inputs already consumed in manufacture merely because the finished goods remain unexported.

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