Money credit under Rule 57-O raised a referable question of law amid conflicting Tribunal views on input timing.

A question of law arose for reference under Section 35H of the Central Excise Act where conflicting Tribunal views existed on the scope of money credit under Rule 57-O of the Central Excise Rules, 1944. The controversy was whether credit could be taken only for inputs received after filing and acknowledgment of the declaration, or also for inputs received earlier if the credit itself was taken after acknowledgment. The High Court held that this legal issue was fit for reference and directed the Tribunal to refer the question, without deciding the merits of entitlement to credit.

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Issues: Whether a question of law arose warranting a reference to the High Court under Section 35H of the Central Excise Act, 1944 on the scope of money credit under Rule 57-O of the Central Excise Rules, 1944, particularly whether credit was available only for inputs received after filing and acknowledgment of the declaration or also for inputs received before filing the declaration.

Analysis: The petition sought a direction to the Tribunal to refer the stated question of law. The record showed divergent Tribunal views on the operation of Rule 57-O, including decisions holding that money credit was not confined to inputs received only after acknowledgment of the declaration and could extend to inputs received earlier, provided credit was taken after acknowledgment. In that background, the Court held that the controversy raised a legal question fit for adjudication. Without entering into the merits of entitlement to credit, the Court concluded that the refusal to make a reference was not justified.

Conclusion: The petition was allowed and the Tribunal was directed to refer the quoted question to the High Court for decision in accordance with law.

Ratio Decidendi: Where the operation of a modvat or money credit rule is supported by conflicting Tribunal decisions and the issue turns on the legal scope of the rule, a question of law arises for reference under Section 35H of the Central Excise Act, 1944.

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