1987 (7) TMI 261 - AT - Central Excise

Tribunal rules in favor of appellants due to Assistant Collector's oversight. Proforma credit allowed for different Tariff Items.

The Tribunal allowed the appeal, ruling in favor of the appellants. It found that the Assistant Collector's orders lacked proper consideration of the ... Proforma credit Issues:Availing benefit of Notification No. 178/77 and Notification No. 295/77-CE, Admissibility of proforma credit under Rule 56A, Compliance with procedure for availing proforma credit.Analysis:In this case, the appellants sought to avail the benefit of Notification No. 178/77 and Notification No. 295/77-CE, which exempted excisable goods from duty if certain conditions were met. The appellant company applied for availing the procedure under Rule 56A to get the benefit of the notifications. The company started availing proforma credit pending formal orders, leading to Show Cause Notices alleging inadmissible proforma credit under Rule 56A. The Assistant Collector made a demand for the amount in question.The advocate for the appellants argued that the proforma credit was covered by the notifications and authorized under the rules. He cited relevant provisions and a tribunal decision supporting the admissibility of proforma credit. The JDR reiterated the lower authority's view. The Tribunal found that the Assistant Collector's orders lacked proper consideration of the facts and arguments presented. The Tribunal clarified that proforma credit could be allowed even if inputs and finished goods fell under different Tariff Items, as long as the government sanctioned remission or adjustment of duty, which was the case here.Regarding compliance with the procedure for availing proforma credit, the Assistant Collector mentioned the requirement to furnish a statement showing the quantity of inputs used. The Collector of Central Excise (Appeals) rejected the appeal based on alleged non-compliance. However, the Tribunal reviewed the appellant's letters and found that they had duly applied for availing proforma credit and were following the necessary procedures. The appellants had also submitted input/output ratios certified by a Chartered Accountant for most raw materials, with a willingness to provide the remaining certifications.Based on the findings, the Tribunal set aside the previous orders and directed that the appellants be granted the benefit of proforma credit under Notification No. 178/77 after due verification. The appeal was allowed, ruling in favor of the appellants.