1988 (4) TMI 63 - HC - Central Excise

Validity of Central Excise notice upheld under Rule 56A proviso. Time-barred argument rejected.

The court upheld the validity of the notice issued by the Assistant Collector of Central Excise under the proviso to sub-rule (2A) of Rule 56A. It ... Demand - Proforma Credit - Provisional Credit Issues Involved:1. Legality of the notice issued by the Assistant Collector of Central Excise.2. Interpretation of Rule 56A, particularly sub-rules (2) and (2A).3. Applicability of the six-month limitation period under sub-rule (5) of Rule 56A.4. Whether permission under sub-rule (2) was granted or deemed to be granted.5. Relevance of Rule 9B to the case.Issue-wise Detailed Analysis:1. Legality of the Notice Issued by the Assistant Collector of Central Excise:The petitioner challenged the legality of the notice dated 25th March 1982, issued by the Assistant Collector of Central Excise, demanding Rs. 76,684.84P. The notice alleged that the petitioner had taken credit illegally in May 1981. The petitioner argued that the notice was issued beyond the permissible six-month period stipulated under sub-rule (5) of Rule 56A, making it illegal.2. Interpretation of Rule 56A, Particularly Sub-Rules (2) and (2A):The petition involved the interpretation of Rule 56A, especially sub-rules (2) and (2A). The petitioner contended that he had kept the authorities informed and had taken proforma credit under sub-rule (2) of Rule 56A. However, the respondents argued that the notice was issued under the proviso to sub-rule (2A), as permission under sub-rule (2) had not been granted. The court found that the petitioner had disclosed all relevant facts but had not received explicit permission under sub-rule (2). Therefore, the provisions of sub-rule (2A) applied, allowing provisional credit subject to final approval.3. Applicability of the Six-Month Limitation Period Under Sub-Rule (5) of Rule 56A:The petitioner argued that any notice for recovery of erroneously allowed credit must be issued within six months as per sub-rule (5) of Rule 56A. However, the respondents contended that the notice was issued under the proviso to sub-rule (2A), which does not have the six-month limitation. The court agreed with the respondents, stating that the action under sub-rule (2A) was permissible as the permission under sub-rule (2) had not been granted.4. Whether Permission Under Sub-Rule (2) Was Granted or Deemed to Be Granted:The petitioner contended that permission under sub-rule (2) must be deemed to have been granted, given the acceptance of various documents and the clearance of goods. However, the court held that explicit permission under sub-rule (2) is necessary and cannot be inferred from the actions taken. Since no such permission was granted, the provisional credit taken was subject to the conditions under sub-rule (2A).5. Relevance of Rule 9B to the Case:The petitioner argued that if the clearance of goods was provisional, the authorities should have used Rule 9B, which provides for provisional assessment. The court found this argument unfounded, stating that Rule 9B is independent of the actions under sub-rule (2A) of Rule 56A. The court noted that Rule 9B applies to situations where further inquiries are needed for duty assessment, which was not the case here.Conclusion:The court concluded that the notice issued by the Assistant Collector of Central Excise was valid under the proviso to sub-rule (2A) of Rule 56A. The petitioner's contention that the notice was time-barred under sub-rule (5) was rejected. The court held that no permission under sub-rule (2) was granted or deemed to be granted, and the provisional credit taken was subject to the conditions under sub-rule (2A). The petition was dismissed, and the rule was discharged with no order as to costs. The interim orders were to continue for one month from the date of the judgment.