2006 (2) TMI 54 - AT - Central Excise

Central Excise Proforma credit Assessee had option either to follow Rule 56A procedure or take benefit of Notification No. 70/94 and pay duty as per said Notification at notified rate

Summary

Issues:
1. Exemption under Notification No 178/83-CE for textured yarn manufacturing.
2. Availability of Rule 56A benefit after the repeal of exemption.
3. Proforma credit availability for stock on hand.
4. Interpretation of Notification No. 70/94-CE regarding duty credit under Rule 56A.
5. Applicability of Rule 56A option during the validity period of Notification No. 70/94-CE.

Analysis:
1. The respondent manufactured textured yarn under the exemption of Notification No 178/83-CE, which was repealed from 1.3.94. The Tribunal remanded the case to consider Rule 56A benefit for stock at the time of repeal based on a Supreme Court decision (Formica India Division Vs. CCE - 1995).

2. The Commissioner (Appeals) allowed the Rule 56A benefit to the respondent, leading to the appeal against this decision by the revenue authorities. The revenue contended that proforma credit was not available for stock on hand, citing Notification No 70/94-CE allowing clearance of textured yarn at a reduced rate until 30th April, 1994.

3. The respondent argued that Notification No. 70/94-CE stipulated no duty credit under Rule 56A for availing its benefits. They emphasized the liberty to choose between Rule 56A procedure or Notification 70/94-CE. The Commissioner's decision was supported by the Supreme Court's judgment in the Formica India Division case.

4. The Tribunal found that throughout the period, the assessees had the option to work under Rule 56A or pay duty at the notified rate. The reference to Rule 56A in Notification No. 70/94-CE confirmed the availability of Rule 56A even during the validity of the notification. The appellant's claim for Rule 56A benefit regarding inputs was deemed valid, and the Commissioner's order was upheld.

5. The judgment concluded that the assessees had the freedom to choose between Rule 56A and the notified rate for duty payment. The specific mention of Rule 56A in Notification No. 70/94-CE indicated the ongoing availability of Rule 56A option. As the appellant sought Rule 56A benefit for inputs, the appeal was rejected, affirming the Commissioner's decision based on legal provisions and precedents.