1996 (3) TMI 196 - AT - Central Excise

Summary

Issues:
1. Whether prior permission of the Assistant Collector is required for availing credit under Rule 57H of the Central Excise Rules.

Analysis:
The appellants, manufacturers of aerated water, utilized glass bottles as inputs in their manufacturing process. They filed a declaration under Rule 57G of the Central Excise Rules on 25-9-1987 regarding the glass bottles in their stock. Subsequently, they applied for credit under Rule 57H on the same day and utilized part of the credit before 30-9-1987. A show cause notice was issued against them for not obtaining prior permission from the Assistant Collector before availing the credit. The Assistant Collector and the Collector of Central Excise (Appeals) upheld the objection. The appeal before the Appellate Tribunal challenges this decision.

The main contention raised by the appellants was that Rule 57H did not explicitly require prior permission from the Assistant Collector for availing credit. They argued that as per the rule, the Assistant Collector may allow credit if certain conditions are met, without specifying prior permission. They cited Tribunal decisions supporting this interpretation and emphasized that the absence of explicit permission should not invalidate the credit availed.

The respondent, represented by the learned SDR, contended that the Rule indeed necessitated prior permission from the Assistant Collector for availing credit. They argued that the Modvat Scheme context implied that such permission should be obtained beforehand to ensure compliance with the rule.

The Tribunal, after considering the arguments, rejected the respondent's view. They emphasized that the language of Rule 57H did not explicitly mandate prior permission from the Assistant Collector. The Tribunal highlighted that the expression "may allow" in the rule did not grant the Assistant Collector the authority to arbitrarily refuse permission without valid reasons or delay the decision unreasonably. The Tribunal noted that in this case, the permission applied for by the appellants had not been granted till the date of the decision. Therefore, the Tribunal concluded that the availing of credit by the appellants in anticipation of the permission, especially when no refusal had been communicated, was justified. Citing previous Tribunal decisions, the Tribunal held that the denial of credit in the impugned order was unwarranted, and thus set aside the order and allowed the appeal.