1997 (2) TMI 245 - AT - Central Excise

Summary

Issues:
1. Denial of benefit of money credit on stock prior to obtaining dated acknowledgement of declaration.
2. Interpretation of Rule 57-O of the Central Excise Rules, 1944 regarding filing of fresh declaration for money credit scheme.
3. Compliance with Rule 57-O(2) after the rescission and restoration of money credit scheme.

Analysis:
1. The appellants appealed against the denial of money credit benefit on stock before obtaining the dated acknowledgement of declaration, citing a violation of Rule 57-O(2) of the Central Excise Rules, 1944. The case revolved around the appellants, engaged in soap manufacturing, availing money credit under specific notifications, rescinded and later restored through subsequent notifications. The dispute arose when the appellants claimed credit on oil stock before obtaining the fresh declaration's acknowledgement.

2. The Manager Legal argued that Rule 57-O's essence is to inform the department of intended product and input usage through a declaration, enabling credit eligibility based on government notifications. He contended that a single declaration suffices for various notifications issued over time, emphasizing that the impugned order wrongly invalidated the earlier declaration under Notification 192/87 concerning Notification 46/89.

3. The legal representative further highlighted that Rule 57-O's procedural nature aims to notify the department of credit utilization, not restricting credit to inputs received post-declaration. Citing precedents like Oswal Vanaspati case, he argued that non-filing of fresh declarations in continuous schemes is a curable technical breach. The Tribunal's decision in Shri Krishna Vanaspati case supported this stance, emphasizing technical breaches' curability when inputs and outputs remain constant.

4. The Respondent argued that the appellants failed to comply with Rule 57-O(2) requirements post-rescission and restoration of the money credit scheme. Stressing the need for a fresh declaration post-restoration, they contended that availing credit on pre-acknowledgement stock was irregular, urging the appeal's dismissal.

5. The Tribunal, referencing the Oswal Vanaspati case, held that Rule 57-O allows credit post-acknowledgement without restricting it to inputs received thereafter. Emphasizing the scheme's continuity and lack of transitional provisions, the Tribunal set aside the impugned order, requiring the appellants to demonstrate compliance with Notification No. 46/89's procedural safeguards to avail credit.

6. Ultimately, the Tribunal allowed the appeal, aligning with the Oswal Vanaspati case's principles, subject to the condition that the appellants prove adherence to Notification No. 46/89's provisions and procedural requirements to validate credit utilization on pre-acknowledgement stock.