Provisional credit under Central Excise Rule 56A may be recovered independently of the six-month limitation when permission is refused.

Where no express permission under Rule 56A(2) of the Central Excise Rules, 1944 had been granted, credit taken while the application was pending was only provisional. On refusal of permission, duty could be recovered under the proviso to Rule 56A(2A), and that recovery mechanism operated independently of Rule 56A(5). Accordingly, the six-month limitation in Rule 56A(5) did not govern such a demand. Mere acceptance of documents, approval of classification, or clearance of goods did not amount to permission under Rule 56A(2), and provisional assessment under Rule 9B was distinguished as separate from recovery under Rule 56A(2A).

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Issues: Whether the demand notice for recovery of proforma credit was governed by Rule 56A(5) of the Central Excise Rules, 1944, on the footing that permission under Rule 56A(2) had been granted or deemed to have been granted, or whether the case fell under Rule 56A(2A) so that recovery could be made under its proviso.

Analysis: The petitioner had disclosed all material facts, but no express order granting permission under Rule 56A(2) was issued. Mere acceptance of documents, approval of classification, or clearance of goods did not amount to a grant of permission to avail credit under Rule 56A(2). Rule 56A(2A) operates where an application under Rule 56A(2) is pending, permitting only provisional credit and making the manufacturer liable if permission is eventually refused. In that event, the recovery mechanism under the proviso to Rule 56A(2A) is independent of Rule 56A(5), and the limitation of six months in Rule 56A(5) does not control such a demand. The argument based on Rule 9B was rejected because provisional assessment under that rule is distinct from the recovery contemplated by Rule 56A(2A).

Conclusion: The notice was validly issued under the proviso to Rule 56A(2A), and the challenge based on Rule 56A(5) failed.

Ratio Decidendi: Where no express permission under Rule 56A(2) has been granted, credit taken during pendency of the application is only provisional and, on refusal of permission, duty may be recovered under the proviso to Rule 56A(2A) without being subject to the limitation in Rule 56A(5).

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