Rule 56-A credit did not lapse on abolition of special excise duty; utilisation of accumulated credit remained valid.

Rule 56-A of the Central Excise Rules, 1944 did not cause credit already taken in R.G. 23 to lapse merely because special excise duty on the relevant goods was abolished. The provision governed grant and utilisation of credit, and Rule 56-A(3)(VI)(b) barred cash refund but did not create any deeming lapse on removal of duty. Special excise duty remained a duty of excise for credit purposes and could be used towards payment on finished excisable goods. The departmental contention that the credit automatically lapsed on 1-3-1979 was unsustainable, and the assessee was entitled to utilise the credit.

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Issues: Whether the credit standing in the assessee's R.G. 23 account under Rule 56-A of the Central Excise Rules, 1944 lapsed when special excise duty on the relevant goods was abolished and whether the departmental appeal, based on that contention, could succeed.

Analysis: Rule 56-A(2) governs the grant of credit benefit and does not provide that credit already availed lapses merely because duty on the relevant goods is exempted or removed. Rule 56-A(3)(VI)(b) only regulates utilisation of credit and prohibits cash refund, but it also does not create any deeming lapse of credit on removal of duty. The special excise duty, though separately accounted for, remains a duty of excise for all purposes, and the rule permits credit of such duty to be utilised towards payment on finished excisable goods. The departmental construction that the credit automatically lapsed on 1-3-1979 was therefore unsustainable.

Conclusion: The assessee was entitled to utilise the credit and the departmental appeal failed.

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