1990 (11) TMI 274 - AT - Central Excise

Summary

Issues:
1. Whether the appellants were entitled to take credit of duty paid on inputs for set-off against finished product under Notification 201/79.
2. Whether the demand for irregular availment of credit was time-barred.
3. Whether the Assistant Collector had jurisdiction to adjudicate the case under Sec. 11A.

Analysis:
1. The appeal challenged the order of the Calcutta Collector of Central Excise regarding the appellants' right to take credit of duty paid on inputs for set-off against finished products under Notification 201/79. The department contended that the inputs should be accompanied by prescribed documents evidencing payment of duty at the time of receipt into the user factory. In this case, the inputs were initially sent without duty payment and under a challan. Subsequently, duty was demanded from the supplier for evasion, paid, and charged to the appellants who then took credit. The issue was whether this action complied with the notification's conditions. The ld. Counsel argued that the demand was time-barred as the show cause notice was issued beyond six months of taking credit. Additionally, it was contended that the Assistant Collector lacked jurisdiction to adjudicate the case invoking the longer period under Sec. 11A, as only the Collector was empowered post-amendment in December 1985.

2. The Tribunal, after considering the arguments, agreed with the appellants' submissions. It held that the wrong availment of duty credit constituted a situation of short levy. Citing precedent, the Tribunal noted that proforma credit under Rule 56A and set-off of duty under Notification 201/79 were similar. As the show cause notice for recovery of duty credit irregularly taken was issued beyond the six-month period, only the Collector, not the Assistant Collector, had the authority to demand duty post-amendment to Sec. 11A in December 1985. Since the Assistant Collector adjudicated the case in February 1986 after the amendment, it was held to be without jurisdiction. The law also provided for the transfer of pending cases from the Assistant Collector to the Collector after the amendment, making the Assistant Collector's order legally unsustainable due to lack of jurisdiction.

3. The ld. D.R. argued that Notification 201/79 was distinct from proforma credit under Rule 56A and emphasized that arguments on limitation and jurisdiction under Sec. 11A were irrelevant in this context. However, the Tribunal found in favor of the appellants, highlighting the importance of complying with the conditions of the notification and the jurisdictional limitations post-amendment. Ultimately, the appeal was allowed on the grounds of lack of jurisdiction, as the Assistant Collector's order was deemed invalid due to the absence of authority to exercise such powers after the statutory amendment.