Retrospective withdrawal of proforma credit permission cannot create prior duty demand absent suppression or fraud.

Departmental permission allowing utilisation of proforma credit under Rule 56A was acted upon by the assessee for payment of duty on finished goods. In the absence of suppression of facts or misrepresentation, the later withdrawal of that permission could operate only prospectively and not retrospectively. A duty demand for the period before cancellation was therefore unsustainable and was set aside.

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Issues: Whether the departmental permission permitting utilisation of proforma credit under Rule 56A of the Central Excise Rules could be withdrawn retrospectively so as to sustain a demand for duty for the period prior to cancellation of that permission.

Analysis: The assessee had been allowed by specific departmental orders to take proforma credit of duty paid on stampings and laminations and to utilise that credit for payment of duty on the finished goods. The arrangement was acted upon during the relevant period and there was no finding of suppression of facts or misrepresentation by the assessee. Once the Department itself later withdrew the permission on the ground that it had not been properly granted, the effect of that withdrawal could operate only from the date of cancellation and not backwards to upset a benefit already availed under an express permission.

Conclusion: The demand for duty for the period prior to withdrawal of permission was not sustainable and was set aside in favour of the assessee.

Final Conclusion: Relief already allowed under the departmental permission could not be withdrawn with retrospective effect, and the demand raised for the earlier period was invalid.

Ratio Decidendi: A departmental permission acted upon by the assessee cannot be withdrawn retrospectively to create a duty demand for the prior period in the absence of suppression or fraud; the withdrawal operates prospectively only.

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