1997 (6) TMI 215 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification 103/61 for set-off of duty on imported intermediates used in manufacturing S.O. Dyes.
2. Transfer of credit balance accumulated under Notification 103/61 to Modvat credit account under Rule 57H.
3. Interpretation of transitional provisions under Rule 57H for transferring credit balance.

Analysis:

1. The case involved a dispute regarding the eligibility of the respondents for exemption under Notification 103/61, allowing set-off of duty on imported intermediates used in manufacturing S.O. Dyes. The Asstt. Commissioner initially denied permission to transfer the accumulated credit balance of Rs. 20,88,694.47, but the Commissioner (Appeals) later held in favor of the respondents, allowing the transfer.

2. The main issue before the Tribunal was whether the accumulated credit balance under Notification 103/61 could be transferred to the Modvat credit account under Rule 57H. The Commissioner (Appeals) allowed the transfer based on the Tribunal's decision in M/s. Sandoz (India) Ltd. v. Collector, which held that if the set-off is allowable, the balance should be transferred under Rule 57H(3).

3. The revenue contended that the transfer was not permissible, citing a Tribunal decision in A.C.C. v. Collector, where it was held that when a notification is rescinded, the exemption granted would no longer be available. However, the respondent's counsel argued that the case law relied upon by the Commissioner (Appeals) supported their position, emphasizing that the credit balance should not be wiped out upon rescinding of the notification.

4. The Tribunal rejected the revenue's argument, stating that the transfer of the credit balance earned under Notification 103/61 was possible under Rule 57H. The Tribunal noted that the respondents had opted for Modvat credit before the dispute was resolved, and as the dispute was only settled later, they were entitled to the transition facility under Rule 57H. The Tribunal upheld the Commissioner (Appeals) decision, emphasizing that the credit balance should not lapse upon rescinding of the notification, and the transfer should be allowed as per the transitional provisions.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and rejected the revenue's appeal, allowing the transfer of the credit balance accumulated under Notification 103/61 to the Modvat credit account under Rule 57H.