MARDIA CHEMICALS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M/s. Mardia Chemicals Ltd. have filed this Appeal being aggrieved with the Order -in -Appeal No. 1166/2001, dated 31 -12 -2001 by which Commissioner (Appeals) has confirmed the demand of duty of Rs. 4,20,000/ - and penalty of Rs. 10,000/ -against them.

(2.) Shri Jitender Singh, learned Advocate, submitted that the Appellants manufactured S.O. Dyes and Chemicals and that they have filed an application dated 30 -3 -1993 with the Assistant Commissioner for allowing pro -forma credit under Rule 56A in respect of duty paid on Napthalene to be used in -the manufacture of H. Acid; that initially the Asstt. Collector rejected their application under letter dated 28 -7 -93 which was remanded by the Commissioner (Appeals) under Order dated 21 -3 -94; that in the mean time, they removed Napthalene and debited the duty amounting to Rs. 4.23 lakhs in RG 23 Part II; that the Assistant Commissioner has confirmed the demand of duty and imposed penalty on the ground that the Appellants were not eligible to take the proforma credit as Rule 56A of the Central Excise Rules had been deleted vide Notification No. 23/94, dated 21 -5 -1994 and accordingly the facility of proforma credit under Rule 56 A was not available; that the Commissioner (Appeals) in the impugned Order, has rejected their Appeal. He further, submitted that the learned Assistant Commissioner has held that credit under Rule 56A was allowable to the Appellants as the inputs and the final product both were classifiable under Tariff Item 68 of the old Central Excise Tariff and had their application to work under Rule 56A being allowed at the relevant time they filed the application, they were eligible to take the proforma credit; that the right to take and utilize the credit had accrued to them before deletion of Rule 56A and their right has not been extinguished by mere omission of this Rule.

(3.) Countering the arguments, Ms. Charul Baranwal, learned Senior Departmental Representative, submitted that once Rule 56A has been omitted from the Central Excise Rules, the question of their taking proforma credit under Rule 56A does not arise; that as they had taken the credit and utilized the same, the duty has to be demanded from them and penalty has to be imposed for wrongly availing the credit.