1997 (5) TMI 155 - AT - Central Excise

Summary

Issues:
- Availing benefit of Notification No. 201/79 for credit of duty paid on blended fibre tops
- Utilization of credit for clearances of finished goods
- Recovery of wrongly utilized credit under Section 11A of the Central Excise Act, 1944
- Interpretation of Notification No. 201/79 and Rule 56A regarding credit eligibility
- Refund of duty equivalent to eligible credit

Analysis:
The appellants in this case were availing the benefit of Notification No. 201/79 for seeking credit of duty paid on blended fibre tops used in manufacturing non-cellulosic spun yarn. The issue arose when a show cause notice was issued for the recovery of wrongly utilized credit, which was confirmed by the Assistant Collector and upheld by the Collector (Appeals), leading to the present appeal.

During the arguments, the appellants' representative divided the credit involved into three parts: pre-Notification existence, post-Notification cessation, and post-cessation period. The representative cited judgments to support the argument that even after the Notification ceased to exist, the accumulated balance during its currency should survive and not be wiped out. The Departmental Representative did not contest this view, acknowledging that the reversal of credit earned until the Notification's rescindment was not warranted.

Regarding the single day of 28-2-1986 when the Notification had ceased to exist, a debate arose on the interpretation of Rule 56A. The Assistant Collector and the Collector's observations did not discuss why the benefit was denied for that particular day. The Departmental Representative argued that the benefit could not be claimed due to non-compliance with Rule 56A. However, the Tribunal disagreed, stating that the benefit under Notification No. 201/79 on 28-2-1986 could not be denied based on the correct interpretation of the sub-rule. Therefore, any credit taken on that day was deemed allowable.

Ultimately, the Tribunal held that the assessees were eligible for the credit taken up to and including 28-2-1986. Since the assessees had paid the confirmed amount, the Assistant Collector was directed to refund duty equivalent to the eligible credit after conducting necessary verification. This decision concluded the matter in favor of the appellants, ensuring the rightful refund of the eligible credit amount.