2002 (1) TMI 689 - AT - Central Excise

Summary

Issues:
- Eligibility for money credit on raw materials used in manufacturing soap
- Interpretation of Rule 57K and related provisions
- Applicability of Section 38A of the Central Excise Act, 1944
- Benefit of money credit scheme under Notification 46/89 CENT

Eligibility for Money Credit on Raw Materials:
The appellants, soap manufacturers, received raw materials for processing and were availing Money Credit under Chapter V.AAA of the Central Excise Rules, 1944. They received Rice Bran Oil (RBO) from Hindustan Lever Limited (HLL) and returned 80% of the processed inputs to HLL as per contract. The Commissioner (Appeals) found that the inputs were not used for soap manufacturing but for fatty acids, thus making them ineligible for money credit under Rule 57K. Consequently, the money credit availed was disallowed, and penalties were imposed by the jurisdictional officers. However, the Tribunal disagreed with this finding, stating that the appellants were entitled to the money credit as per the Money Credit Scheme and the lower authorities' decision was set aside.

Interpretation of Rule 57K and Related Provisions:
The Commissioner (Appeals) held that the appellants were not eligible for money credit on the raw materials used for processing and returning to HLL, citing Rule 57K and related notification provisions. The Tribunal, after considering submissions from both sides, found that the money credit scheme was applicable to the appellants as per their case history and Tribunal decisions. The Tribunal noted that the appellants had complied with the Trade Notice requirements and that the benefit of the Money Credit Scheme should not be denied based on the Revenue's proposal.

Applicability of Section 38A of the Central Excise Act, 1944:
The learned SDR argued that Section 38A of the Central Excise Act, 1944, read with Section 132 of the Finance Act, 2001, did not entitle the appeals to proceed further. However, the Tribunal found that the provisions of Section 38A were clear and explicit, and when read with the Finance Act, the proceedings could not be stopped. Therefore, the appeals were allowed to continue despite the SDR's contention.

Benefit of Money Credit Scheme under Notification 46/89 CENT:
The appellants contended that their case history and previous Tribunal decisions supported their entitlement to the benefit of the Money Credit Scheme. The Tribunal agreed, stating that there was no reason to deny them the benefit as proposed by the Revenue and upheld by the lower authorities. Consequently, the penalty clause invoked by the lower authorities was deemed unnecessary, and the appeals were allowed with consequential benefits as per the law.

In conclusion, the Tribunal set aside the orders of the lower authorities, allowing the appeals and granting the appellants the benefits of the Money Credit Scheme based on their compliance with the relevant provisions and previous Tribunal decisions.