1993 (11) TMI 136 - AT - Central Excise

Tribunal upholds credit transfer decision, finds delay shouldn't deprive entitlement

The Tribunal upheld the decisions of the Collector (Appeals), allowing the transfer of auxiliary and regulatory duty credits to the respondents' Personal ... Proforma Credit - Auxiliary duty and regulatory duty Issues Involved:1. Transfer of credit of auxiliary duty of excise.2. Transfer of credit of regulatory duty.3. Compliance with Rule 56A and Rule 173G of the Central Excise Rules.4. Entitlement to cash refund.5. Procedural delays and departmental permissions.Detailed Analysis:1. Transfer of Credit of Auxiliary Duty of Excise:The first appeal (154/84) arises from the Order-in-Appeal No. 17/OR/84 dated 24-2-1984, where the Collector (Appeals) allowed the transfer of auxiliary duty of excise credit to the Personal Ledger Account (P.L.A.) of the respondents. The Assistant Collector had initially disallowed this transfer, arguing that the credit could not be utilized after the relevant notification was withdrawn. However, the Collector (Appeals) held that since the credit was earned when the notification was in force, it could not be treated as lapsed due to the subsequent withdrawal of the notification.2. Transfer of Credit of Regulatory Duty:The second appeal (E-155/84) involves a similar decision regarding the transfer of regulatory duty credit. The Collector (Appeals) allowed the transfer of this credit to the respondents' P.L.A., despite the Assistant Collector's refusal based on the removal of the material and product from the scope of Rule 56A.3. Compliance with Rule 56A and Rule 173G of the Central Excise Rules:The appellant argued that the transfer of credit to the P.L.A. was contrary to Rule 56A(3)(vi)(b) and Rule 173G, which require credit to the account current to be made only by cash payment into the Treasury. The appellant contended that allowing the transfer of credit would effectively grant a cash refund, which is explicitly barred by Rule 56A(3)(vi)(b).4. Entitlement to Cash Refund:The appellant's argument was that the impugned decision of the Collector (Appeals) effectively granted a cash refund, which is prohibited. They illustrated this with an analogy to demonetized currency notes losing their value. The respondents countered that they were entitled to the credit transfer based on amendments to Rule 56A, which allowed for the continued utilization of unutilized credits even after the abolition of auxiliary and regulatory duties.5. Procedural Delays and Departmental Permissions:The respondents argued that they had applied in time for the transfer of the unutilized credits and that the delay in granting permission was due to the department's failure to act promptly. They cited amendments to Rule 56A that permitted the continued utilization of such credits and contended that they should not be penalized for the department's delay. The Tribunal agreed with this argument, stating that the respondents were prevented from utilizing the credits due to departmental delays and that the credits should be deemed available when they were initially requested.Conclusion:The Tribunal upheld the decisions of the Collector (Appeals), allowing the transfer of auxiliary and regulatory duty credits to the respondents' P.L.A. The Tribunal found that the respondents were entitled to the credits based on the relevant provisions of Rule 56A and that the department's delay in granting permission should not deprive them of this entitlement. The appeals were dismissed accordingly.