1996 (1) TMI 217 - AT - Central Excise

Summary

Issues: Appeal against order allowing higher notional credit under Rule 57B of Central Excise Rules even if full Modvat Credit not initially taken.

Analysis:
The appeal was filed by the Collector of Central Excise, Chandigarh challenging the order-in-appeal that allowed M/s. Shingar Lamps (P.) Ltd. to take the differential higher notional credit under Rule 57B of Central Excise Rules, despite not initially taking the full quantum of Modvat Credit admissible to them. The respondents did not appear for the hearing but requested a decision based on their written submissions. The Tribunal proceeded with the appeal, considering the impugned order-in-appeal in favor of the respondents, stating there was no scope for a cross-objection. The Departmental Representative argued that the higher notional credit should be taken at the time of input receipt, not at a later stage. The Collector had issued a trade notice emphasizing this position. However, the Tribunal found no legal basis for this argument, citing Rules 57A and 57B of the Central Excise Rules and a previous Tribunal decision in a similar case. The respondents had initially taken Modvat Credit and later claimed the differential notional credit within a short time frame of two days, which the Tribunal deemed reasonable and not causing administrative difficulties. Consequently, the appeal was dismissed for lacking merit.

This case primarily revolved around the interpretation of Rule 57B of the Central Excise Rules regarding the timing of claiming higher notional credit and the admissibility of such credit. The Department argued that the notional credit should be taken at the time of input receipt and not at a later stage, as per a trade notice issued by the Collector. However, the Tribunal disagreed, finding no legal basis for this argument in the relevant rules. The Tribunal emphasized that Rules 57A and 57B did not prohibit claiming differential credit at a later stage, especially when the inputs were received from small scale industries availing of exemptions. The Tribunal also referenced a previous decision to support its interpretation, highlighting the permissibility of taking differential credit within a reasonable time frame.

The Tribunal's decision focused on the practicality and reasonableness of allowing the respondents to claim the differential notional credit within a short period after initially taking Modvat Credit. The Tribunal found that the two-day gap between the initial credit and the differential credit did not pose any significant administrative difficulties for the department, especially considering the statutory provisions and the nature of inputs received from small scale industries benefiting from exemptions. Ultimately, the Tribunal dismissed the appeal, deeming it meritless based on the lack of legal support for the Department's argument and the reasonable actions of the respondents in claiming the higher notional credit.