CCE Vs. DR. REDDY LABORATORIES LTD.

JUDGEMENT

(1.) M/s. Dr. Reddy's Laboratories Ltd. (respondents) are engaged in the manufacture of medicaments (SH. 3003.10 of the CETA Schedule) and are availing the facility of CENVAT credit on inputs. On 30.3.2000, they took over the gelatin capsule factory of M/s. American Remedies Limited (ARL, for short) through amalgamation of the two companies. At the time of the take -over, input duty credit to the extent of Rs. 79,585/ - was lying, unutilised, in the CENVAT account of ARL, though the input had been utilised by them earlier. The respondents applied to the competent authority under Rule 57AF of the Central Excise Rules, 1944 for transfer of the above credit to their own CENVAT account. This request was allowed by the Commissioner. The Revenue is now in appeal against the Commissioner's decision.

(2.) Ld. DR reiterates the grounds of the appeal and, referring to Sub -rule 2 of Rule 57AF, submits that any transfer of credit could have been allowed under Sub -rule 1 only if the inputs were also physically transferred from ARL to the respondents. According to Id. DR, where the inputs were not physically available for such transfer at the time of transfer of ownership of the factory, the CENVAT credit on such inputs, lying unutilised in the transferor's account, was not liable to the transferred under Sub -rule 1 of Rule 57AF. Ld. Counsel for the respondents counters this argument of the DR and submits that such a condition cannot be read into such -rule 2 of Rule 57AF. Counsel relies on the Tribunal's decision on Aar Aay Products Pvt. Ltd. v. CCE, New Delhi , wherein, on a similar set of facts, transfer of input duty credit from the modvat account of the transferor to that of the transferee was allowed. In the cited case, what was available for transfer was only the input duty credit which was lying unutilished. The inputs had been utilised by the transferor before the transfer of ownership of his factory. The credit was allowed to be transferred to the transferee under Sub -rule 21 of Rule 57F. The provisions of Rule 57AF relevant to the instant case are para materia with those of the erstwhile Rule 57F(21) considered in the case of Aar Aay Products P. Ltd.

(3.) Following the above case law, I hold that it was open to the Commissioner to allow transfer of input credit from the account of ARL to that of the respondents despite the fact that the inputs, having already been utilised by ARL prior to amalgamation of the two companies, were not available in stock at the time of the amalgamation. In the result, the impugned order is upheld and the appeal is dismissed.