1991 (10) TMI 171 - AT - Central Excise

Summary

Issues:
- Whether higher notional credit under Rule 57B can be taken at a later date after initial credit is taken.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Bombay was against an Order-in-Appeal rejecting the appellants' appeal regarding the credit of difference between the higher notional credit and the credit originally taken for receiving cabinets as inputs for computers from a small scale unit availing exemption under Notification No. 175/86. The appellants realized their mistake in not taking the higher notional credit and rectified it within four days of the initial credit. The Superintendent objected to the additional credit taken later, leading to the appeal. The Ld. Advocate argued that Rule 57B does not prohibit taking higher notional credit at a later date, especially when rectifying a mistake promptly. On the other hand, the Ld. SDR contended that Trade Notices require immediate higher notional credit on input receipt, emphasizing MODVAT Credit's instantaneous nature.

The Tribunal observed that the inputs were from an exempt small scale unit, making the appellants eligible for higher notional credit under Notification No. 175/86. The key issue was whether the higher notional credit must be taken immediately upon input receipt or can be rectified subsequently. While acknowledging MODVAT Credit's immediate nature, the Tribunal noted that a mistake in taking lower credit initially should not bar rectification to avail higher notional credit. Rule 57B does not expressly prohibit availing higher credit at a later date, especially when correcting an error promptly within four days. Citing a precedent, the Tribunal emphasized that once MODVAT Credit is taken, additional credit can be claimed later if the initial credit was insufficient. Consequently, the Tribunal allowed the appeal, overturning the lower authorities' decision and granting the appellants the benefit of higher notional credit.