1986 (2) TMI 216 - AT - Central Excise

Issues Involved:
1. Date of eligibility for proforma credit concession under Rule 56A.
2. Authority of the Assistant Collector to review his own decision.
3. Requirement of a show cause notice before withdrawing a previously granted benefit.
4. Nature of the power conferred under Rule 56A (administrative vs. quasi-judicial).

Issue-wise Detailed Analysis:

1. Date of Eligibility for Proforma Credit Concession under Rule 56A:
The primary dispute was whether the proforma credit under Rule 56A could be granted from a date prior to the application date. The appellants argued that the Assistant Collector's order dated 28-10-1976, which allowed credit for materials received up to 17-4-1976, was correct. They cited various judgments, including the Government of India's decision in the case of Crown Aspo Rope Manufacturing Co. and the Allahabad High Court's decision in Satyanarayan Aggarwal, to support their claim that proforma credit could be granted from the date of application. Conversely, the respondent argued that Rule 56A only allowed the benefit from the date of application, citing judgments from the Bombay High Court in M/s. Zenith Tin Works Pvt. Ltd. and the Delhi High Court in Electronics Ltd. The tribunal ultimately concluded that Rule 56A is prospective in nature and does not permit retrospective application, thus supporting the respondent's view.

2. Authority of the Assistant Collector to Review His Own Decision:
The appellants contended that the Assistant Collector's decision dated 22-3-1977, which withdrew the previously granted benefit, amounted to an illegal review of his own decision. They cited the Supreme Court's decision in AIR 1966 S.C. 641 and the Tribunal's decision in M/s. Rallis India Ltd. The respondent countered that the Assistant Collector's order was administrative and not subject to legal review. The tribunal examined Rule 56A(2) and concluded that the Assistant Collector did not have the authority to review his own decision unless explicitly authorized by law. The tribunal also noted that the Assistant Collector's decision was not merely a rectification of a clerical error but a substantive review, which was not permissible.

3. Requirement of a Show Cause Notice Before Withdrawing a Previously Granted Benefit:
The appellants argued that the withdrawal of the proforma credit without issuing a show cause notice violated the principles of natural justice, citing the Bombay High Court's decision in M/s. Precision Steel Fasteners. The respondent maintained that the Assistant Collector's order was administrative and did not require a show cause notice. The tribunal found that the withdrawal of the credit amounted to a demand for the levy of duty, which should have been preceded by a show cause notice, thus supporting the appellants' contention.

4. Nature of the Power Conferred Under Rule 56A (Administrative vs. Quasi-Judicial):
The tribunal was divided on whether the power under Rule 56A was administrative or quasi-judicial. One member argued that the power was administrative, while another member contended that it was quasi-judicial, as it involved granting certain duty benefits and affected the rights of the appellants. The third member, who resolved the tie, concluded that Rule 56A conferred a statutory power to grant duty benefits and required adherence to the principles of natural justice, thus making it quasi-judicial in nature.

Conclusion:
The tribunal, by majority opinion, allowed the appeal, set aside the Assistant Collector's order dated 22-3-1977, and the Appellate Collector's order, granting consequential relief to the appellants. The tribunal held that the Assistant Collector did not have the authority to review his own decision, the withdrawal of credit required a show cause notice, and the power under Rule 56A was quasi-judicial.

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