Transferred excise credit cannot be denied where the assessee applied in time and departmental delay caused non-utilisation.

Transferred credit of Special Excise Duty could not be denied where the assessee applied for transfer before the cut-off date and the jurisdictional authority delayed disposal of the application. Rule 57F(8) of the Central Excise Rules, 1944 required transferred credit to be used for payment of Basic Excise Duty on clearances up to 31-3-94, but the assessee's timely application on 8-3-94 and the departmental delay meant the non-utilisation of credit before the deadline was not attributable to the assessee. The credit was therefore to be adjusted against the duty demand, and the penalty was not justified.

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Issues: Whether credit of Special Excise Duty could be denied and penalty sustained when the assessee applied for transfer of credit before the cut-off date but the jurisdictional authority did not decide the application in time.

Analysis: Rule 57F(8) of the Central Excise Rules, 1944 required the transferred credit to be utilised for payment of Basic Excise Duty on clearances made up to 31-3-94. The assessee had applied on 8-3-94, within the period available under the rule and trade notices. The delay in deciding the application was attributable to the departmental authority. Since the assessee had also paid substantial duty from PLA during March 1994, the failure to utilise the credit before the cut-off date could not fairly be attributed to the assessee.

Conclusion: The denial of credit and the penalty were not justified. The duty amount was directed to be adjusted against the admissible credit and the penalty was set aside.

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