Full Judgment
They decided to shift the plant and machinery of Kalol factory to Wamaj and sent a letter dated 16.12.97 to the Commissioner seeking for permission to transfer the unutilised Modvat Credit of Rs. 65,01,687 in the RG23A for the Kalol factory to the RG23A at Wamaj factory. On 5.3.98 they informed the Assistant Commissioner the details of inputs in stock, finished goods as well as amount of Credit unutilised i.e.
Rs. 63,97,716/- with a request to shift plant and machinery, finished goods and inputs to Wamaj factory.
2. The assessee was intimated that permission was granted to transfer of unutilised credit to the extent available on "inputs as such" or "input contained in the goods under process" and that any excess credit in RG 23A of the transferred factory would lapse. On representations made, the Commissioner heard the appellants and passed the impugned order rejecting the transfer of an amount of Rs. 61,73,563.50 and allowed the credit of Rs. 33,714.40 under Rule 57F (20). Hence this appeal.
a) Rules 57F (20) and (21), which are applicable, at the relevant time read as- "(20) On an application made by a manufacturer of the final product, the Commissioner may, subject to such conditions and limitations as he may impose, permit a manufacturer having credit in his account in Form RG 23A maintained under Rule 57G and lying unutilised, on account of shifting of the factory belonging to the manufacturer, to another site, or on account of change in ownership, or change in the site of a factory resulting from sale, merger, amalgamation or transfer to a joint venture with the specific provision for transfer of liabilities of the old factory, to transfer such unutilised credit to such transferred, sold, merged or amalgamated factory.
(21) The credit under Sub-rule (20) shall be allowed only if the stock of inputs as such or in process is also transferred along with the factory to the new site or ownership and the inputs on which credit has been availed of are duly accounted for to the satisfaction of the Commissioner.
b) The decision relied upon by the Ld Commissioner of this Tribunal in the case of the N.K. Chemical Industries 1998 (100) E.L.T. 495 was a decision passed by Rules 57F (6) as it stood at the material time and that rule is not applicable in this case. Therefore the decision of the Ld single member cannot be applied in this case.
c) The plain reading of Rule 57F (20) and (21), indicates that the transfer of the Credit in the Account in RG 23A maintained under Rule 57G and lying unutilised on account of shifting of a factory, belonging to the manufacturer, to another site, or on account of Amalgamation etc transfer of such unutilised credit to such transferred or merged factory could be permitted by the Commissioner, only if the stock of inputs as such or in process is also transferred. Transfer of balance in accounts only, without transfer of physical stocks of input lying as such or in process will not be permissible. The rules do not indicate or stipulate a in correlation between the transfer of an amount of credit with physical transfer of such input as such or in process. The order of the Commissioner placing limits on the transfer of the Amount in accounts, relating to the physical quantum of inputs being transferred, therefore cannot be upheld. The contention of the Ld Advocate for the appellant, that sale merger/amalgamation of transfer contemplating in Rule 57A (20)/ (21) and 57S 5/6 of Central Excise Rules, 1994 are not sale merger/amalgamation etc of a Company but relating to a factory & in this connection reliance on the case of Orient Ceramics (P) Ltd Vs CCE 2001 (130) E.L.T. 520 in para 12 is well founded. Similarly the reliance in the case of K.M. Sugar Mills (133) E.L.T. 567 would cause direction of the credit in balance to be transferred. In view of this, no merits are found to uphold the Commissioner's order. The same is required to be set aside and appeal allowed in above terms.