1998 (1) TMI 140 - AT - Central Excise

Summary

Issues:
1. Entitlement to proforma credit on inputs manufactured within the appellant's own factory.
2. Retroactive effect of the Explanation added to the rule by Notification No. 118/80-C.E.

Analysis:

Entitlement to Proforma Credit:
The case involved a dispute regarding the appellant's entitlement to proforma credit on Raw Petroleum Coke (RPC) manufactured within their own factory for the production of Calcined Petroleum Coke (CPC). The Revenue alleged that the appellant was not entitled to such credit as the RPC was manufactured in their own factory, contrary to the conditions for availing proforma credit. A significant demand amounting to Rs. 3,68,98,485.93 was proposed, including a penalty of Rs. 20,00,000/-. The appellant argued that the Explanation added to the rule by Notification No. 118/80-C.E. clarified that proforma credit could be availed on inputs manufactured within the manufacturer's factory. The appellant relied on a previous judgment by the Tribunal in the case of Orient Paper Mills to support their claim. Ultimately, the Tribunal agreed with the appellant's contention and allowed the appeal, granting consequential relief.

Retroactive Effect of the Explanation:
The main point of contention was whether the Explanation added to the rule by Notification No. 118/80-C.E. should have a retrospective effect. The appellant argued that the Explanation, being clarificatory in nature, should apply retrospectively. On the other hand, the respondent contended that the Explanation should only be effective from the date of its notification. The Tribunal sided with the appellant, agreeing that the Explanation had a clarificatory nature and should have a retrospective effect. This decision was based on the interpretation of the rule and previous Tribunal judgments, including the case of Orient Paper Mills. As a result, the appeal was allowed, and the Stay Petition was disposed of accordingly.