Proforma credit under Rule 56A cannot be extinguished without express authority, and batch-wise correlation is not required.

Rule 56A was described as a self-contained scheme allowing proforma credit of duty paid on eligible inputs used in manufacturing specified finished goods. The rule did not require batch-to-batch correlation between particular inputs and the finished goods cleared on payment of duty. Outstanding credit could be varied only in the contingencies expressly provided, and it could not be denied or extinguished merely because it remained unutilised at a given time. The credit was therefore available for utilisation against duty on the specified finished goods, and denial of such utilisation was not justified.

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Issues: Whether outstanding proforma credit under Rule 56A could be denied or extinguished in the absence of any specific provision authorising such denial, and whether the rule required correlation between the exact inputs received and the finished goods cleared on payment of duty.

Analysis: Rule 56A was treated as a self-contained simplified scheme for granting credit of duty already paid on eligible inputs used in the manufacture of specified finished goods. The rule did not prescribe batch-to-batch correlation between particular inputs and particular clearances of finished goods. Credit could be varied only in the contingencies expressly provided in the rule, and no provision was shown authorising the extinguishment of an outstanding credit merely because it remained unutilised at a particular point of time. The credit was to be utilised towards payment of duty on the specified finished goods for which the inputs were permitted to be used.

Conclusion: The denial of utilisation of the outstanding proforma credit was not justified, and the assessee was entitled to succeed.

Final Conclusion: The appellate order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Under Rule 56A, proforma credit on duty-paid inputs cannot be denied or extinguished in the absence of an express provision, and the rule does not require batch-wise correlation between the inputs and the finished goods cleared.

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