1988 (12) TMI 215 - AT - Central Excise

Summary

Issues:
1. Eligibility of the appellants for taking credit on the input for the period 1-3-1986 to 31-5-1986.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras was against the order passed by the Collector of Central Excise (Appeals) Madras. The case revolved around the classification of Pre-stressed Concrete Sleepers and the eligibility of the manufacturers for availing credit on High Tensile Steel Wire (HTS Wire) used as a raw material. The manufacturers were initially availing set-off of duty under Notification No. 201/79, which was rescinded after the new Tariff Act came into force. The appellants sought to avail proforma credit under Rule 56A of the Central Excise Rules but were issued a show cause notice for reversal of credit taken for the period 1-3-1986 to 31-5-1986. The Assistant Collector and the Collector (Appeals) held that the appellants were not eligible for such benefit after 1-3-1986. The appellants contended that they were eligible under Notifications No. 91/86 and 280/86, which they claimed were applicable to them.

The learned Consultant for the appellants argued that Notification No. 91/86 allowed continued availing of credit even after 28-2-1986 for manufacturers working under set-off notifications. The appellants had previously availed benefits under Notification No. 201/79 and were eligible for continued credit under sub-rule (8) of Rule 56A. The Department, represented by the learned D.R., contended that sub-rule (8) of Notification No. 91/86 applied only to manufacturers availing proforma credit under Rule 56A, not to those under set-off notifications. They argued that the appellants were rightly denied credit from 1-3-1986 as they did not file the necessary declaration in time.

The Appellate Tribunal analyzed the wording of sub-rule (8) under Rule 56A inserted by Central Excise Rules (7th Amendment) 1986. The sub-rule allowed continued credit for manufacturers already enjoying proforma credit before 1-3-1986 or under notifications requiring specific procedures. The appellants, though not availing proforma credit before 28-2-1986, were working under a set-off notification similar to proforma credit requirements. The Tribunal found that the appellants were eligible for credit from 1-3-1986 onwards as per the wording of sub-rule (8), despite not filing a declaration. The Department's argument that credit should start from the date of declaration was rejected based on the sub-rule's language. Consequently, the appellants' appeal was allowed, and the Department's cross-objection was rejected.

In conclusion, the Appellate Tribunal ruled in favor of the appellants, emphasizing the eligibility of manufacturers under set-off notifications for continued credit under sub-rule (8) of Rule 56A, even if they did not file a declaration in time. The judgment highlighted the importance of interpreting legal provisions in line with their explicit wording to determine eligibility for tax credits.