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TMI Blog2003 (6) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... .E. Rules, 1944 was extended for the first time to textile products vide Notification No. 7/94-C.E. (N.T.), dated 1-3-94, Cotton yarn including sewing thread, synthetic filament yarn whether or not textured and yarn of synthetic staple fibres were covered as finished excisable goods vide Serial Nos. 3, 8 and 13 of the Table annexed to the said notification. This notification was amended vide Notification No. 17/94-C.E. (N.T.), dated 6-4-94 extending the benefit of the proforma credit to yarn including sewing thread falling under Chapters 52, 54 and 55. As yarn including sewing thread was notified as the finished products for the first time on 6-4-94, the original authority was of the view that proforma credit was not admissible in respect of raw-materials which were used in the manufacture of finished excisable goods i.e. filament sewing thread, SSP thread, Cotton sewing thread. On appeal before the Commissioner (Appeals), the Commissioner (Appeals) allowed the appeals of the respondents-assessee holding that proforma credit was admissible to the assessee in respect of the raw materials/inputs lying in stock as on 1-3-94 and also those received during the period from 1-3-94 to 5-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, Notification No. 7/94, dated 1-3-94 issued under Rule 56A(1) specified finished excisable goods in respect of which the credit of specified duties paid on the raw material or component parts should be allowed as credit in terms of sub-rule (2) of Rule 56A. It contained no provision to allow the duty in respect of goods received prior to 1-3-94 and lying in stock as on 1-3-94 whereas what was required basically from a manufacturer under the said sub-rule was to file an application thereunder to receive material or component parts for the manufacture of the finished goods. (d) Rule 56A was intended to allow the credit that was eligible for material, component parts or finished products prior to the commencement of CETA, 85 also for the period subsequent to it. (e) Rule 56A(2A) allows materials and component parts to be received and to take credit of duty paid on them provisionally. (f) Under Notification No. 7/94-C.E. (N.T.), dated 1-3-94 only cotton yarn used in the manufacture of sewing thread would be covered for the benefit of proforma credit. In respect of SSP yarn and filament yarn, the entries in the notification as existed as on 1-3-94 would not permit any credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of duty on inputs. Rule 8 was omitted from the Rule Book from 1-7-1988 and thereafter all notifications regarding credit are being issued under Rule 56A only. - In any case, it is immaterial as to under which of the two Rules the notifications have been issued because both require the assessee to follow procedure prescribed under Rule 56A. - Considering the said factual position, the Tribunal in Ashok Leyland s case has held that set off of duty on inputs lying in stock is available to the assessee. Therefore, ratio of the said judgment applies to Respondent s case. - Respondent s claim for proforma credit on lying stock is also strengthened by CEGAT SZB s another decision in 1990 (48) E.L.T. 297. - Even otherwise, sub-rule (2B) of Rule 56A which restricts proforma credit on inputs received in the factory on or after the date of such notification doesn t apply to notifications issued under Rule 56A(1). The Notification No. 7/94 in this case was issued under Rule 56A(1). (2) Reliance on Rule 56A(8) is misconceived as the above Rule and the proviso thereto are irrelevant as far as the issue involved in these appeals is concerned because the said Rule and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of Notification under Rule 56A and as the department has itself not challenged before Com. (A) the allowance of proforma credit on such lying stocks in O-in-O No. 26/98, dated 27-2-1998, there is no logical reason as to why the department should challenge allowance of proforma credit on inputs lying in stock as far as other Os-in-O involved in the impugned O-in-A are concerned. (4) Without prejudice to the above, it is submitted that, even otherwise, the proposal for disallowance of proforma credit of Rs. 5,10,989/- taken on lying stock covered in Appeal No. E/3573/98 is hit by limitation because the said proforma credit was admittedly taken on 18-3-1994 while the relevant corrigendum materially changing the relevant Show Cause Notice by proposing to disallow the said credit of Rs. 5,10,989/- taken of lying stocks of input was issued on 19-9-1994, i.e., after 6 months of taking of the said proforma credit provided under Rule 56A(5). We rely on 1996 (83) E.L.T. 496 (Bom.). (5) Without prejudice to the above it is submitted that, as far as Appeal No. 281/99 is concerned, there is no Show Cause Notice issued for disallowance of credit as required under Rule 56A(5). Dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit in terms of the sub-rule (2) of Rule 56A. When the notification was issued on 1-3-94 and it stipulated about the credit of duty already paid on the goods specified therein, in our view, undoubtedly it relates to the duty paid on the goods received as on 1-3-94. Therefore, when a view is taken that it relates to the goods received as on 1-3-94, and when it could not have been possible for the manufacturer to have fully used the goods in the manufacture of finished product on that day, certain portion of the goods must have been lying in stock. In such circumstances, going by the wording of the notification, it cannot be said that the benefit of notification is not available in respect of the stock lying on or before 1-3-94 and on which duty has been paid. Therefore, in order to extend the benefit what is to be seen is whether the goods have suffered duty or not and if the goods have suffered duty, the benefit cannot be denied. We observe that the Commissioner (Appeals) while deciding the appeals has relied upon the decision of the Tribunal in the case of Ashok Leyland Ltd. v. C.C.E., Madras in Appeal Nos. E/1331-86-B.I (Order No. 1177/96), dated 28-5-96 wherein in similar circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished product, if such credit was not allowable under this rule immediately before commencement of CETA, 1985. As rightly contended by the assessee-respondents, reliance by the Revenue on Rule 56A(8) is misconceived as the rule and the proviso thereto are not relevant to the issue under consideration. We observe that the Commissioner (Appeals) has very thoroughly gone into the issue and has come to a conclusion that proforma credit is admissible to the assessee in respect of the raw materials/inputs lying in stock as on 1-3-94 as could be seen from paras 3 and 4 of his order dated 7-9-98 and his order reflects application of mind and we do not find any infirmity in his order so far as it relates to admissibility of credit in respect of the goods lying in stock as on 1-3-94 and we uphold the same. 7. As regards appeal No. E/3573/98 filed by the Revenue against impugned order-in-appeal covering Order-in-Original No. 26/98, dated 27-2-1998, the respondents-assessee have taken a plea that the original authority has disallowed the proforma credit of Rs. 12,23,873.28 which was taken on inputs received on or after 1-3-94 and the said authority has not disallowed proforma credit of Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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