1992 (12) TMI 154 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57B regarding Higher Notional Credit
Reasonableness of the time period to claim higher notional credit
Applicability of Board's Circular and previous judgments

Analysis:
The judgment by the Appellate Tribunal CEGAT, Bombay involved a dispute regarding the interpretation of Rule 57B concerning the Higher Notional Credit. The case revolved around the eligibility of the assessee to claim higher notional credit at a subsequent stage, beyond the initial entry of inputs. The respondents had initially taken Modvat credit based on duty paid, but later realized they were eligible for a higher notional credit under Rule 57A and Notification No. 175/86. The Department objected to the differential credit claimed later, arguing it should have been taken at the time of input receipt. The Asstt. Collector ordered reversal of the credit, which was partially allowed by the Collector (Appeals). The Tribunal, in its order, allowed the respondents to take the differential credit within a reasonable period of six months from the initial credit, a decision challenged by the Revenue through a reference application.

The Tribunal analyzed the issues raised by the Revenue in the reference application. It noted that the interpretation of Rule 57B by the Collector (Appeals) and the Tribunal differed regarding the timing of claiming higher notional credit. The Tribunal observed that Rule 57 does not specify the timing for claiming higher notional credit, and rectifying an initial mistake within a reasonable period is permissible. The Tribunal considered the normal period of limitation for claiming a refund as a reasonable period for claiming the differential credit. The judgment referenced the Gujarat High Court's decision in a similar case, emphasizing the importance of eligibility and timely claim within a reasonable period.

The Tribunal addressed the argument raised by the Revenue regarding the absence of a specific provision in the law for claiming higher notional credit at a later stage. While acknowledging the absence of a specific provision, the Tribunal emphasized that what is not prohibited in the rule can be permitted if eligibility is established and the claim is made within a reasonable period. The Tribunal agreed that there was a point of law requiring authoritative pronouncement for clarity. Consequently, it referred the following question to the Hon'ble High Court of Bombay for consideration: "Whether in the context of the provisions of Rule 57B read with Central Excise exemption Notification No. 175/86, the Tribunal is justified in allowing the claim of higher notional credit within a period of six months from the initial credit, applying the time limit prescribed under Section 11B."

In conclusion, the Tribunal's decision to allow the claim of higher notional credit within a reasonable period of six months from the initial credit was based on the principle of rectifying initial mistakes and ensuring eligibility criteria are met. The reference to the High Court seeks a definitive ruling on the interpretation of Rule 57B and the reasonableness of the time period for claiming higher notional credit.