1989 (2) TMI 196 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 56A procedure for utilization of credit of duty.
2. Whether outstanding credit under Rule 56A can be utilized for future payments.
3. Denial of benefit of credit by lower authority without specific provision.

Analysis:
The case involved an appeal against the order of the Appellate Collector of Central Excise, Calcutta, regarding the excess balance in the appellant's RG-23 account registers. The Appellate Collector held that the excess credit should not have been present as it did not relate to the stock position of inputs and outputs. The appellant argued that they had strictly followed the Rule 56A procedure and that there was no requirement for a direct correlation between inputs utilized and the finished goods. The Departmental Representative acknowledged the Rule 56A procedure but argued that any excess credit should not be kept outstanding for future use. However, no specific provision under Rule 56A was cited to deny the benefit of utilizing outstanding credit.

The Tribunal observed that Rule 56A is a simplified procedure for providing relief on duty paid inputs used in manufacturing specific end products, without mandating a batch-to-batch correlation. The relevant part of Rule 56A(2) was examined, emphasizing the utilization of proforma credit for payment of duty on specified end products. The Tribunal noted that the Rule does not provide for extinguishing credit without a specific provision. It was highlighted that Rule 56A allows utilization of proforma credit for payment of duty on any finished excisable goods if the same type of materials or components are used in their manufacture. Referring to a High Court ruling, it was established that there is no obligation to correlate imported goods to the ultimate product under Rule 56A.

In conclusion, the Tribunal found the lower authority's denial of the benefit of utilizing outstanding credit to be legally incorrect. The appeal was allowed with consequential relief, emphasizing that Rule 56A's self-contained procedure does not permit the withdrawal of the benefit of proforma credit without a specific provision. The case highlighted the importance of strict adherence to the Rule's provisions and the lack of grounds to deny the appellant the benefit of utilizing outstanding credit as per Rule 56A.