1993 (2) TMI 216 - AT - Central Excise

Summary

Issues:
1. Availment of credit under Rule 57H of the Central Excise Rules.
2. Interpretation of sub-rules (1) and (2) of Rule 57H.
3. Exclusion clause under Rule 57H(2) regarding eligibility for credit prior to 1-3-1986.
4. Application of Rule 56A for availment of proforma credit.

Analysis:

The judgment pertains to an appeal challenging the rejection of credit under Rule 57H of the Central Excise Rules by the Collector of Central Excise (Appeals), Bombay. The appellants had received raw material under the MODVAT scheme but were denied credit due to duty payment before 31-1-1986. The main contention raised was the interpretation of sub-rules (1) and (2) of Rule 57H in determining credit eligibility.

The appellants argued that they were eligible for credit under sub-rule (1) of Rule 57H as the goods were received on 31-3-1986. They contended that the rejection based on sub-rule (2) was unjustifiable as sub-rule (1) should stand independently. Additionally, they claimed eligibility under the exclusion clause, citing Rule 56A for proforma credit before 1-3-1986.

The Judge rejected the argument that sub-rule (1) should be considered independently, stating that sub-rule (2) qualifies the grant of credit during the transitional period. However, regarding the exclusion clause in sub-rule (2), it was noted that the items in question were eligible for proforma credit under Rule 56A before 1-3-1986, which would override the bar on credit under sub-rule (2) if duty was paid before 31-1-1986.

The judgment emphasized that if an item was eligible for credit under any other provision before 1-3-1986, the bar on credit under Rule 57H(2) would not apply. As the appellants were entitled to credit under Rule 56A prior to 31-1-1986, the denial of credit was deemed unjustified. Consequently, the order rejecting credit was set aside, and the appellants were held eligible for the credit they sought.

In conclusion, the appeal was allowed in favor of the appellants, highlighting the importance of considering the specific provisions of Rule 57H and the applicability of exclusion clauses when determining credit eligibility under the Central Excise Rules.