Transitional input credit under Central Excise rules starts from the effective date, not from later declaration formalities.

A transitional credit provision inserted in Rule 56A(8) of the Central Excise Rules, 1944, using a non obstante clause, was construed to extend continued input-duty credit not only to manufacturers already availing proforma credit, but also to assessees operating under analogous Rule 8 notifications with a set-off mechanism. On that reading, the credit became available from 1-3-1986, the effective date of the new regime. The timing or absence of a declaration could not defer or curtail that substantive entitlement, because procedural formalities could not override the amendment's operative transitional benefit.

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Issues: (i) Whether the appellants were entitled to continue availing credit of duty on inputs for the period 1-3-1986 to 31-5-1986 under the transitional scheme introduced by Rule 56A(8) of the Central Excise Rules, 1944 and the related notifications; (ii) whether the absence or timing of declaration could defer the availability of such credit.

Issue (i): Whether the appellants were entitled to continue availing credit of duty on inputs for the period 1-3-1986 to 31-5-1986 under the transitional scheme introduced by Rule 56A(8) of the Central Excise Rules, 1944 and the related notifications.

Analysis: The inserted sub-rule uses a non obstante clause and extends continued credit not only to manufacturers already availing proforma credit under Rule 56A, but also to those enjoying benefit under notifications issued under Rule 8 of the Central Excise Rules, 1944 requiring a similar procedure. The appellants were operating under Notification No. 201/79 with a set-off mechanism analogous to the proforma credit procedure. On that construction, the benefit of continued credit became available to them from the commencement of the new regime on 1-3-1986.

Conclusion: The appellants were entitled to credit from 1-3-1986 onwards.

Issue (ii): Whether the absence or timing of declaration could defer the availability of such credit.

Analysis: The Department's view that credit could arise only from the date of declaration was held inconsistent with the opening words of the inserted sub-rule. Since the provision operated notwithstanding anything elsewhere in the rule, compliance with declaration formalities could not curtail the substantive transitional entitlement created by the amendment.

Conclusion: The credit could not be postponed to the date of declaration.

Final Conclusion: The assessees succeeded on the merits and were held eligible to retain the credit for the disputed period, with the departmental challenge failing.

Ratio Decidendi: A transitional credit provision framed with a non obstante clause and extending benefit to manufacturers covered by analogous Rule 8 notifications must be construed to confer the credit from the effective date of the change, and not to make that entitlement dependent on later procedural declaration formalities.

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