1995 (3) TMI 282 - AT - Central Excise

Summary

Issues:
- Denial of higher notional credit under Rule 57B
- Interpretation of Notification 175/86 and Notification 72/86
- Compliance with the conditions for higher notional credit under Rule 57B

Analysis:
The appeal in this case challenges the denial of higher notional credit to the appellants under Rule 57B by the Collector of Central Excise (Appeals), Madras. The appellants argued that they should be entitled to the higher notional credit as they initially availed the benefit of Notification 175/86 for their inputs. However, after their clearances exceeded Rs. 75 lakhs, they switched to the benefit of Notification 72/86. The appellants contended that even under Notification 72/86, which is an exemption notification, they should still be eligible for the enhanced notional credit as per Rule 57B. The appellants claimed that the lower appellate authority erred in not considering Notification 175/86 along with Notification 72/86 when assessing their eligibility for higher notional credit. They argued that a verification conducted with the input suppliers confirmed that they were availing the benefit of Notification 175/86. On the other hand, the Department's representative supported the lower authority's decision, stating that the suppliers had switched to Notification 72/86 after crossing the Rs. 75 lakhs limit, and this notification did not provide for higher notional credit as required by Rule 57B.

The key issue for consideration was whether the appellants met the requirements for higher notional credit under Rule 57B. Rule 57B mandates that inputs exempted under a specific notification should also provide for a higher credit and that the inputs must have been cleared during a specified period. The record revealed that the suppliers initially cleared goods under Notification 175/86 until the Rs. 75 lakhs limit, after which they opted for Notification 72/86 with a concessional duty rate of 5%. The Tribunal found that the clearances made after the Rs. 75 lakhs limit were not covered under Notification 175/86, as the goods were received under Notification 72/86. The appellants' argument that all clearances should be considered under Notification 175/86 was rejected. Since Notification 72/86 did not provide for higher notional credit, the appellants did not fulfill the conditions for claiming such credit under Rule 57B. The Tribunal emphasized that the appellants had the opportunity to verify the clearance details with their suppliers but failed to provide any evidence to support their claim. Therefore, the Tribunal upheld the lower appellate authority's decision and dismissed the appeal.

In conclusion, the Tribunal ruled that the appellants were not entitled to higher notional credit under Rule 57B as they did not meet the necessary conditions. The decision was based on the clearances made under Notification 72/86, which did not offer a provision for enhanced credit. The appellants' failure to provide additional evidence to support their claim further weakened their case. The Tribunal upheld the lower authority's order, emphasizing the importance of compliance with the specific requirements outlined in Rule 57B for claiming higher notional credit.