1993 (8) TMI 179 - AT - Central Excise

Summary

Issues:
- Interpretation of Notification No. 103/61 for availing proforma credit on imported dye intermediates
- Compliance with Rule 56A for claiming proforma credit
- Time-barred demand for countervailing duty availed by the appellants
- Imposition of penalties by the Assistant Collector and subsequent confirmation by the Collector (Appeals)

Analysis:
1. The appeal involved the interpretation of Notification No. 103/61 for availing proforma credit on imported dye intermediates under Tariff Item 68 for manufacturing Synthetic Organic Dyestuffs falling under Tariff Item 14D. The appellants sought permission to avail proforma credit under Rule 56A, but the Assistant Collector withdrew permission citing a rule amendment disallowing proforma credit on inputs under Tariff Item 68. The issue was whether the appellants were entitled to such credit during the relevant period.

2. The Assistant Collector disallowed the credit availed by the appellants and confirmed the demand for countervailing duty, imposing penalties under Rule 56A. The appellants appealed to the Collector (Appeals), who upheld the Assistant Collector's decision, leading to the current appeal before the Appellate Tribunal CEGAT, New Delhi.

3. The appellants argued that compliance with the procedural requirements of Rule 56A was sufficient to avail the benefit under Notification No. 103/61. They contended that the demand for countervailing duty beyond six months from the show cause notice was time-barred, as there was no allegation of fraud or suppression of facts.

4. On the other hand, the respondent argued that the appellants were not eligible for the benefit under the notification as they had not obtained permission to avail proforma credit as required under Rule 56A(2). They asserted that the demand was not time-barred due to the appellants availing credit provisionally, obligating them to repay without a demand being made.

5. The Tribunal examined the case records and submissions from both sides. It noted a previous decision in M/s. Arlabs Ltd. v. CCE, Pune, where credit for materials falling under Tariff Item 68 was permissible if Rule 56A procedures were followed. In this case, the appellants failed to obtain the required permission under Rule 56A(2), leading to the disallowance of proforma credit during the relevant period.

6. However, the Tribunal found merit in the appellants' argument regarding the time-barred demand for countervailing duty. Citing a relevant Tribunal decision in Hindustan Motors v. Collector of Central Excise, Calcutta, the Tribunal held that the demand issued beyond six months from the show cause notice was time-barred under Section 11A, despite the provision in Rule 56(2A) for repayment without a demand.

7. Consequently, the Tribunal held that the demand for credit availed within six months from the show cause notice was enforceable, setting aside the penalties imposed on the appellants. The appeal was disposed of accordingly with any consequential relief granted.