1998 (7) TMI 241 - AT - Central Excise

Summary

Issues:
Whether prior permission of the Assistant Commissioner is necessary before the assessee could take credit of duty paid on the inputs at the relevant time under Rule 57H of the Central Excise Rules, 1944.

Analysis:
The Revenue filed an application seeking reference of a question of law arising from the Tribunal's Final Order. The respondents took credit on inputs without waiting for the Assistant Collector's permission, leading to a dispute. The Assistant Collector and the Collector disallowed the credit, citing the requirement of prior permission under Rule 57H. However, the Tribunal held that no such permission was necessary at the relevant time. The Revenue contended that Rule 57H mandates prior permission, while the respondents argued that the Tribunal consistently ruled otherwise.

Rule 57H states that the Assistant Collector may allow credit of duty paid on inputs under certain conditions without requiring prior permission. Previous Tribunal decisions, such as Collector of Central Excise v. Formac Engineering Ltd., emphasized granting credit if the Modvat scheme's requirements were met, even without strict compliance with technical aspects. Similarly, in E.M.C. Steelal Ltd., the Tribunal found no explicit requirement for prior permission in Rule 57H, focusing on fulfilling the specified conditions for credit approval.

In Aqueous Victuals Ltd., the Tribunal rejected the argument for prior permission under Rule 57H, but due to the legal nature of the issue and lack of superior forum guidance, decided to refer the question to the High Court. Consequently, the Tribunal forwarded the question of law to the Hon'ble Allahabad High Court for consideration, addressing the necessity of prior permission for availing credit under Rule 57H. Ultimately, the Reference Application was allowed, signifying the importance of clarifying this legal aspect for future cases.