RG 23 credit could not be lapsed while duty liability remained sub judice; credit had to be carried forward

Rule 56A did not require RG 23 credit to be wiped out merely because the finished product had ceased to be dutiable or because the underlying duty liability remained unresolved. Where the assessee's final liability on compound fertilisers was still sub judice before the Supreme Court, the credit balance was only a paper entry and immediate closure was not warranted. The administrative treatment of the credit as lapsed was therefore set aside, and the credit was directed to be carried forward until the pending liability issues were finally determined.

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Issues: Whether the credit already standing in the RG 23 account could be treated as lapsed and closed, or should be carried forward pending final decision of the Supreme Court on the assessee's duty liability.

Analysis: Rule 56A did not require that credit in the RG 23 account be wiped out merely because the finished product had ceased to be dutiable or because the relevant liability remained unresolved. The credit balance was only a paper account entry and its immediate closure was not warranted when the assessee's ultimate liability on the finished compound fertilisers was still sub judice before the Supreme Court. In the circumstances, fairness required that the administrative act of treating the credit as lapsed should await the final outcome of the pending issues affecting the duty position.

Conclusion: The order treating the RG 23 credit as lapsed was set aside and the credit was directed to be carried forward until the Supreme Court finally determined the pending liability issues.

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