1989 (5) TMI 235 - AT - Central Excise

Appeal favors appellants, Collector's review justified under Sec. 35A. Rule 56A compliance found, credit denial unjustified.

The appeal was decided in favor of the appellants. The judgment clarified the Collector's authority to review decisions under Sec. 35A and deemed his ... Proforma Credit Issues Involved:- Justification of the Collector in initiating review proceedings.- Requirement of issuing a notice within the time limit specified under Sec. 11A.- Substantial compliance with sub-rule 3(i)(b) of Rule 56A.Issue-wise Detailed Analysis:1. Justification of the Collector in Initiating Review Proceedings:The Collector's authority to review under Sec. 35A of the Central Excises & Salt Act, 1944, was scrutinized. The judgment clarified that Sec. 35A allows the Collector to review any decision if he is not satisfied with its correctness, legality, or propriety. This power is not confined to extraordinary situations. The Collector's review was deemed justified as it was within his purview to ensure the correctness of the lower authority's decision.2. Requirement of Issuing a Notice within the Time Limit Specified under Sec. 11A:The judgment addressed the necessity of issuing a notice within the time limit specified under Sec. 11A. It was observed that a show cause notice had already been issued by the Superintendent, which included the duty demand for the period extending beyond six months. When the Assistant Collector discharged this notice, the Collector reviewed the order under Sec. 35A. The judgment concluded that the original notice issued by the Superintendent gets revived upon the Collector's finding that the discharge order was incorrect, and no additional notice was required within the time limit specified under Sec. 11A.3. Substantial Compliance with Sub-rule 3(i)(b) of Rule 56A:The main issue revolved around whether the appellants substantially complied with sub-rule 3(i)(b) of Rule 56A. The facts established that the appellants received the input materials in original packing through their agents, accompanied by D-3 declarations and photocopies of gate passes. Although the appellants did not produce subsidiary gate passes, the goods were verified and credits extended based on the available documents. The judgment emphasized that the denial of credit solely on the technical non-fulfillment of producing subsidiary gate passes would amount to double taxation, which the Government's policy aimed to avoid. The appellants were deemed to have substantially complied with Rule 56A, and the credit denial was found unjustified.Conclusion:The appeal was decided in favor of the appellants, with the judgment noting that the appellants had substantially complied with the provisions of Rule 56A. The decision was specific to the peculiar facts and circumstances of this case and was not intended for universal application. The appellants were granted consequential relief.