Proforma credit under Rule 56-A continued validly despite notification rescission where substantial procedural compliance and successor notification existed.

Proforma credit under Rule 56-A of the Central Excise Rules, 1944 could continue despite rescission of the earlier notification where the goods remained covered by the rule, the assessee had filed the required intimations and returns, and credit was taken under valid authority with substantial compliance of procedure. The later notification carried forward a substantially similar exemption and procedural framework, so rescission of the earlier notification did not by itself extinguish the existing sanction or require fresh permission. Continued availment of the credit was therefore treated as valid, and the demand and disallowance were held unsustainable.

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Issues: Whether proforma credit taken under Rule 56-A of the Central Excise Rules, 1944 could continue after rescission of the earlier notification when the credit facility and procedural framework were substantially carried forward by a subsequent notification.

Analysis: The credit scheme was initially linked to Notification No. 166/79, which was later rescinded with effect from 1-8-1980. The crucial question was whether the rescission automatically destroyed the existing sanction and required a fresh permission before credit could be availed further. The record showed that the goods remained covered under Rule 56-A throughout the relevant period, that the assessee had filed the required intimations and returns, and that credit had been taken and utilised under valid authority with substantial compliance of the prescribed procedure. The later Notification No. 201/79, which contained a substantially similar exemption and procedure, supported the view that the sanction for remission or adjustment of duty on the relevant parts and accessories continued to operate notwithstanding rescission of the earlier notification.

Conclusion: The continued availment of proforma credit was valid and no fresh permission was required; the demand and disallowance were unsustainable and the issue was decided in favour of the assessee.

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