2000 (4) TMI 496 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57B of the Central Excise Rules, 1944 regarding the timeframe for taking notional higher credit.
2. Validity of taking notional higher credit at a later stage beyond the initial credit period.

Issue 1 - Interpretation of Rule 57B:
The case involved a dispute where M/s. Kay Poly Plast Ltd. availed Modvat credit under Rule 57A of the Central Excise Rules, 1944. The Department noticed that the respondent had taken higher notional credit under Rule 57B after the initial Modvat credit on inputs. The Department issued a show cause notice for recovery of the notional higher credit taken beyond six months from the original credit date. The lower appellate authority set aside the duty demand, stating that Rule 57B allows for taking notional higher credit subsequent to the original credit within a reasonable period. The Tribunal, based on previous decisions, held that Rule 57B did not specify a time limit, allowing for notional higher credit within a reasonable period. The Tribunal upheld the lower authority's decision, rejecting the Revenue's appeal.

Issue 2 - Validity of Notional Higher Credit at Later Stage:
The Revenue filed a reference application seeking clarification on whether notional higher credit under Rule 57B could be taken at a later stage for an indefinite period. The Tribunal noted that a similar issue had been referred by the Western Regional Bench to the Bombay High Court. Consequently, the Tribunal referred the question to the Hon'ble Rajasthan High Court for consideration. The question posed was whether the Tribunal was justified in allowing higher notional credit to be taken at a subsequent stage, even beyond six months from the receipt of inputs and the original credit date. The Tribunal sought the High Court's opinion on this matter due to the absence of a specific time limitation in Rule 57B.

In conclusion, the judgment addressed the interpretation of Rule 57B of the Central Excise Rules, 1944 concerning the timeframe for taking notional higher credit and the validity of taking such credit at a later stage. The Tribunal's decision allowed for notional higher credit within a reasonable period, despite the absence of a specific time limit in the rule. The case highlighted the importance of understanding the provisions of the law and the application of such rules in the context of excise duties and credits.