1994 (2) TMI 155 - AT - Central Excise

Issues Involved: Refusal of permission to transfer proforma credit, rejection of refund claim, applicability of Section 11B of the Central Excise Act, and entitlement to unutilized proforma credit.

Issue 1: Refusal of Permission to Transfer Proforma Credit

The appeal E/2380/87-NRB arises from an order upholding the refusal to transfer Rs. 18,85,256.20 of unutilized proforma credit from RG-23 Part II Register to RG 23A Part II Register under Rule 57H(3) of the Central Excise Rules, 1944. The refusal was based on the ground that the credit was not lying unutilized immediately before obtaining the dated acknowledgment of the Rule 57G declaration.

Issue 2: Rejection of Refund Claim

The appeal E/2501/91-NRB concerns the rejection of a refund claim for the same amount of unutilized proforma credit on the grounds of being time-barred. The Assistant Collector rejected the claim by applying the provisions of Section 11B of the Central Excise Act, 1944, which was upheld by the Collector (Appeals).

Detailed Analysis:

Background and Facts:

The appellants are engaged in manufacturing computers, office machines, and calculators. Initially, computers were classified under TI 33D of the Central Excise Tariff. The classification issue was settled in July 1983, leading to the applicability of Notification No. 148/76-CE, which exempted computers from excise duty to the extent of duty already paid on peripheral devices. The appellants requested permission to avail proforma credit of excise duty paid on peripherals on 21-6-1982, which was granted on 30-7-1983, effective from the date of application. Due to delays in granting credit, an unutilized balance remained in the proforma credit account.

Chronology of Events:

1. 21-6-1982: Application for proforma credit.
2. 30-7-1983: Permission granted to avail proforma credit from 21-6-1982.
3. 9-3-1984: Delay condoned by the Collector.
4. 17-4-1984: Credit allowed for inputs received from 19-6-1980 to 21-6-1982.
5. 6-2-1985: Credit allowed for inputs received from 21-6-1982 to 31-7-1983.
6. 18-5-1985: Additional credit allowed due to calculation error by Customs.

Legal Analysis:

Section 11B Applicability:

The Tribunal examined whether Section 11B of the Central Excise Act, 1944, which deals with the refund of excise duty, was applicable. It was concluded that Section 11B was not applicable to the present case as the claim did not arise from the payment of excess duty but from the delay in granting proforma credit. The Tribunal referred to the Rajasthan High Court's decision in Adarsh Metal Corporation v. Union of India, which held that Section 11B is inapplicable for refunds arising from appellate orders.

Case References:

The Tribunal relied on the Bombay High Court's judgment in Deccan Sales Corporation, which dealt with a similar issue of delayed credit and the resultant unutilized balance. The High Court had held that the Department's rejection of the claim for cash refund was incorrect. The Tribunal also cited its own decisions in MRF Ltd. and Sandoz (India) Ltd., which allowed cash refunds of unutilized balances.

Conclusion and Order:

The Tribunal held that the appellants were entitled to the amount of Rs. 18,85,256.20 either by transferring the amount to RG 23A Part II Register, by cash refund, or by a suitable entry in the PLA. Consequently, the order dated 5-4-1991 of the Collector of Central Excise (Appeals), New Delhi, was set aside, and appeal E/2501/91-NRB was allowed with consequential relief. Since relief was granted in this appeal, appeal E/2380/87-NRB was dismissed as infructuous.

This comprehensive analysis covers all relevant issues, preserving legal terminology and significant phrases from the original judgment.

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