1987 (11) TMI 194 - AT - Central Excise

Summary

Issues:
- Interpretation of notification for grant of set-off
- Jurisdiction of Assistant Collector to review and withdraw permission for set-off
- Application of Rule 56A(5) for recovery of wrongly availed credit
- Validity of demands for recovery based on error in granting set-off
- Effectiveness of rescinding permission for set-off

Interpretation of notification for grant of set-off:
The appellants, manufacturers of cellulosic spun yarn, applied for set-off under a Trade Notice issued by the Collector. However, no specific notification was referenced in their application. The Assistant Collector initially permitted the set-off, but later sought recovery, stating that no valid notification existed for the set-off. The Tribunal noted that the Trade Notice did not confer authority for the set-off, and the Assistant Collector erred in granting it based solely on the Notice. The Tribunal held that the absence of a valid notification rendered the initial permission erroneous.

Jurisdiction of Assistant Collector to review and withdraw permission for set-off:
The appellants argued that the Assistant Collector lacked authority to review and withdraw the permission for set-off once granted. They contended that the order was quasi-judicial and not administrative. However, the Tribunal disagreed, citing Rule 56A(2C) allowing appeals against refusal of set-off permission. This indicated a quasi-judicial nature of the order, permitting the Assistant Collector to review and withdraw the permission.

Application of Rule 56A(5) for recovery of wrongly availed credit:
The Assistant Collector invoked Rule 56A(5) to recover the wrongly availed set-off credit. The appellants argued against this action, claiming the removals occurred under the approved set-off. The Tribunal clarified that Rule 56A(5) empowered recovery in case of errors or omissions, allowing the Assistant Collector to demand repayment of the credit wrongly taken.

Validity of demands for recovery based on error in granting set-off:
The Tribunal rejected the appellants' argument that demands for recovery were unjustified, emphasizing that the Assistant Collector's error in granting set-off was promptly discovered. Notices were issued within the specified time limit, allowing recovery of the credit. The Tribunal upheld the validity of the demands for recovery, considering the Assistant Collector's jurisdiction to rescind the permission for set-off.

Effectiveness of rescinding permission for set-off:
Despite the argument that recovery for earlier periods was not justified due to the timing of the order rescinding permission, the Tribunal held that the demands for recovery were valid. The Tribunal concluded that the recovery demands based on the error in granting set-off were legal and upheld the orders of the lower authorities, dismissing the appeals.