1990 (4) TMI 170 - AT - Central Excise

Summary

Issues:
(i) Whether credit can be taken in the proforma account for the subsequent differential duty paid on inputs initially credited based on Gate Passes.
(ii) Whether the transfer of credit from proforma to modvat account for the differential duty is legally sustainable.

Analysis:

The case involves an appeal against the Collector of Central Excise (Appeals) order regarding the transfer of credit from proforma to modvat account. The appellants, manufacturers of stators and rotors, imported CRNGO sheets, part of which were supplied to another company. The appellants availed of proforma credit initially and later sought Modvat credit after its introduction in the 1986 Budget. The dispute arose when differential duty was paid on certain inputs, leading to a request for transfer of this credit to the modvat account.

The main contention revolved around Rule 56A(9), which prohibits simultaneous availing of proforma credit and Modvat benefit on the same inputs. The Collector (Appeals) held that since the appellants had already filed for Modvat credit, they were not entitled to proforma credit for the differential duty paid later. The Department argued that the Assistant Collector's decision to allow the credit transfer was not in line with Rule 56A.

Upon detailed analysis, the Tribunal observed that the closure of the proforma account and the transition to Modvat credit rendered the initial proforma credit redundant. The Tribunal referred to Rule 56A provisions regarding variations in duty payments and credit adjustments. It was concluded that even if proforma credit was not permissible, the appellants were entitled to credit in the PLA account under Rule 173G(1).

Ultimately, the Tribunal directed the authorities to allow the appellants to take credit for the subsequent differential duty paid in the PLA account and adjust the Modvat Account accordingly. The decision highlighted the technical non-compliance with Rule 56A(9) but emphasized the entitlement of the appellants to the credit in the PLA account.

In conclusion, the appeal was disposed of in favor of the appellants, granting them the right to claim credit for the differential duty paid on inputs in the PLA account and adjusting the Modvat Account correspondingly.