2006 (1) TMI 147 - HC - Central Excise

Summary

Issues:
1. Interpretation of Money credit under Rule 57-O of the Central Excise Act, 1944 regarding the timing of inputs for availing credit.
2. Refusal by CEGAT to refer the question to the High Court for adjudication.

Issue 1 - Interpretation of Money credit under Rule 57-O:
The petitioner, a soap manufacturer, sought benefit under notifications (P/1 & P/2) claiming to be a manufacturer of soap other than for toilet purposes. The petitioner submitted a declaration under Rule 57H(1) r/w Rule 57-K and provided details of stock and inputs. A show cause notice was issued upon availing credit under the money credit scheme. The Dy. Collector dropped the proceedings, but the Commissioner disagreed, stating that Section 57H did not apply to goods under Rule 57-I. The Commissioner directed an appeal for reconsideration of the order (P/11). An appeal to the Commissioner (Appeal) set aside the Dy. Commissioner's order. The petitioner then appealed to CEGAT, which rejected the appeal, holding that credit under the money credit scheme is available only on inputs received after the acknowledgment of the declaration filed under Rule 57-O. The petitioner sought a reference to the High Court on the interpretation of Rule 57-O regarding the timing of inputs for availing credit.

Issue 2 - Refusal to refer the question to the High Court:
The CEGAT refused to make the reference to the High Court, leading to the filing of a petition under Section 35H of the Central Excise Act. The High Court considered previous CEGAT decisions where it was held that money credit under Rule 57-O is not restricted to inputs received only after acknowledgment but also extends to inputs received earlier, although credit must be taken subsequent to acknowledgment. The High Court found that a question of law arises for adjudication based on these precedents and directed the respondent to refer the question to the Court for adjudication. The matter was disposed of without costs.

This judgment delves into the interpretation of Rule 57-O of the Central Excise Act, specifically regarding the timing of inputs for availing credit under the money credit scheme. It highlights the procedural history of the case, including the initial claim for benefit, subsequent show cause notice, differing opinions of authorities, and appellate decisions. The High Court's analysis relied on previous CEGAT decisions to determine that a question of law necessitated adjudication, ultimately directing the reference of the question to the Court for resolution.