Central Excise PLA credit reversal must follow prescribed procedure; unit closure does not excuse correction of accounts.

Credit in the PLA could be taken back only in the manner authorised by the Central Excise Rules, namely on the prescribed procedure and not unilaterally by the assessee. The assessee's self-made accounting entry for clearances under Rule 57F(2) was therefore improper, and the direction to reverse it by debiting the PLA and restoring credit in RG 23A Part II remained binding. Closure of the unit did not excuse compliance, because the unit remained under excise control and the relevant accounts were available. The plea based on non-functioning of the unit was rejected.

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Issues: Whether duty credit could validly be taken back in the PLA on the assessee's own without the prescribed mode of payment or permission, and whether closure of the unit excused compliance with the direction to rectify the accounting entry.

Analysis: Rule 173G(1A) required withdrawal from the PLA only on application to and permission from the Commissioner, while Rule 173G(1) permitted periodical credit in the account current only by cash payment to the Treasury. The assessee had taken the credit back in the PLA on its own for clearances under Rule 57F(2), which was not in accordance with the prescribed procedure. The direction to reverse the erroneous entry by debiting the PLA and taking credit back in RG 23A Part II remained binding. The closure of the unit did not dispense with compliance because the unit continued to remain under excise control and the relevant accounts were available.

Conclusion: The credit taken back in the PLA was improper, and the plea based on non-functioning of the unit was rejected. The appeal failed.

Ratio Decidendi: Credit in the PLA can be taken only in the manner authorized by the Central Excise Rules, and an assessee cannot avoid correction of an accounting entry merely because the manufacturing unit has stopped operations.

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