1999 (4) TMI 385 - AT - Central Excise

Tribunal allows higher credit rate under rule 57B despite rescinded notification.

The Tribunal held that the appellant was entitled to take credit at the higher rate specified in paragraph 5 of the notification, as long as rule 57B was ... Modvat - Notional credit - SSI Exemption Issues:Applicability of rule 57B and paragraph 5 of notification 175/86 for taking credit on inputs under Central Excise Rules 1944.Analysis:The appellant received consignments in April 1993 on which duty had been paid by the manufacturer under notification 175/86. The appellant took credit, in addition to the duty actually paid, based on rule 57B and paragraph 5 of the notification. These provisions allowed for additional credit beyond the duty paid by the manufacturer on inputs used in manufacturing final products.Notification 175/86 was rescinded with effect from April 1, 1993, but the appellant had already taken the credit. The department contended that the benefit of higher credit, known as notional credit, was not available after the rescission of the notification. A notice was issued demanding duty on the additional credit, which was confirmed by the Assistant Collector and the Collector (Appeals).The appellant argued that despite the notification being rescinded, the requirements of paragraph 5 and rule 57B were met when the duty was paid, therefore justifying the credit taken. The appellant also cited a previous Tribunal decision in support of their position.The departmental representative maintained that notional credit could not be taken after the notification ceased to exist. However, the Tribunal clarified that the authority for taking credit greater than the duty paid was provided in rule 57B, not the notification itself. The objective of the provision was to incentivize small-scale industries by allowing them to compete with organized sectors.The Tribunal held that the appellant had the right to take credit at the higher rate specified in paragraph 5, as long as rule 57B was in force, regardless of the rescission of the notification. Referring to the previous Tribunal decision, the Tribunal concluded that the appellant rightfully took the higher notional credit. Consequently, the appeal was allowed, the impugned order was set aside, and consequential relief was granted.