Proforma credit transfer cannot be denied when assessee acted on departmental permission without fault and followed procedure.

Denial of proforma credit was unsustainable where the assessee had acted on permission granted by the departmental authority for transfer of credit from the predecessor unit and had complied with the prescribed procedure. The rejection rested only on the view that such permission could be granted by the Collector, not the Assistant Collector, but no fault was found on the assessee's part. In these circumstances, disallowance of credit was treated as inequitable, and the transfer should have been confirmed in the interest of justice. The appeal thus succeeded for the assessee.

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Issues: Whether the denial of proforma credit and the demand of duty were sustainable when permission for transfer of credit from the predecessor unit to the successor company had been granted by the Assistant Collector and the assessee was not at fault.

Analysis: The order rejecting the credit was based solely on the view that permission for transfer under the prescribed procedure could be granted only by the Collector and not by the Assistant Collector. The record disclosed no lapse on the part of the assessee, and the assessee had acted on the permission granted and had maintained the prescribed procedure. In these circumstances, the denial of credit was treated as inequitable, and the Collector ought to have exercised discretion to confirm the transfer of credit rather than disallow it.

Conclusion: The denial of proforma credit was unsustainable and the appeal succeeded in favour of the assessee.

Ratio Decidendi: Where an assessee has acted without fault under a permission granted by the departmental authority, denial of credit solely on the ground of want of competence in granting that permission is inequitable and the credit transfer should be sustained in the interest of justice.

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