ORDER
V.P. Gulati, Member (T)
1. This is an appeal filed by the Revenue against the order of the Collector of Customs & Central Excise (Appeals), Madras, dated 21-9-1988. Brief facts of the case are that the respondents before the original authority sought transfer of a credit allowed to them in the refund proceedings drawn up earlier by the Assistant Collector by way of credit in R.G. 23 register to R.G. 23A account for utilisation. The learned lower authority, however, turned down their request vide his communication C.No. V/34A/18/4/86 (Pt.) dated 23-3-1988 in the following terms:
” As the original duty has been paid by you in R.G. 23 in terms of set off Notification by following the procedure set out under Rule 56A, transfer of refund of Rs. 16,088.47 (period from Oct. 1982 to Sep. 1983) and Rs. 8,980.00 (period from Oct. 1981 to March 1982) – file C.No. V/34A/18/3/86 Vol. I. Pt.) from R.G. 23 to R.G. 23A cannot be permitted at this stage.”
On appeal, the Collector (Appeals) allowed the appellants’ plea by holding as under:
“I find that the Asst. Collector has not given any reason why the transfer from R.G. 23 account to R.G. 23A account is not allowable under Central Excise Rules, when there is a specific provision incorporated in Rule 57H(3) of the Central Excise Rules for such transfer. Regarding the amount being available to appellants’ credit prior to the date of filing of modvat application, under Rule 57G, I find that they had filed the refund application in 1985. Therefore, for no fault of theirs, the amount was not available, because the Asst. Collector did not pass any order for a sufficiently long period of time. In view of that, it should be held that the amount refunded by the Asst. Collector and mentioned in his order should be deemed to be available in their R.G. 23 account prior to their filing modvat declaration under Rule 57G. In view thereof, if the materials and components used by the appellants in manufacture of final products during the period of refund and after filing of the declaration under Rule 57G are the same, the transfer of credit balance should be allowed by the Asst. Collector.”
2. The learned Collector of Central Excise, Madras, in his grounds of appeal has urged as under:
“In terms of Rule 57H(3), on an application from a manufacturer who had been availing special procedure under Rule 56A immediately before commencement of MODVAT Rules, the Collector may permit such manufacturer to transfer the credit tying unutilised before such commencement in his R.G. 23 to his account R.G. 23A. It is evident from the above that only such credit available in the R.G. 23 account immediately before commencement of MODVAT Rules can be transferred to the R.G. 23A account. There is no provision under this rule for transfer of credit taken after the commencement of the MODVAT procedure.”
3. The learned JDR for the Department reiterated the grounds of appeal as reproduced above.
4. The learned Consultant for the Respondents pleaded that the respondents had been allowed credit amounting to Rs. 16,088.47 for the period from October, 1982 to September, 1983 and Rs. 8,980/- for the period October, 1981 to March, 1982 by the learned Assistant Collector and this credit was allowed in terms of Rule 56A and cited the decision of the Special Bench of the Tribunal in the case of Sundaram Fasteners Ltd. v. Collector of Central Excise, Madras, reported in 1987 (29) ELT 275 (Tribunal), and pleaded that the credit should be allowed transfer to R.G. 23A.
5. It is observed that it is not denied that the respondents were eligible for the credit under Rule 56A and the credit allowed was for the period before the introduction of MODVAT Scheme. Since the proceedings had been going on before the lower authority the appellants were given the benefit of the credit due to them for the period prior to the coming into force of the MODVAT Scheme at a later date after the MOD-VAT Scheme came into force. The appellant-Collector wants the Tribunal to read the Rule literally. The Rule has to be read in a manner to advance the purpose of the Scheme and in this case I observe that the appellant was eligible to the benefit of Rule 56A before coming into force of the MODVAT Scheme and credit with reference to the period prior to that had been given to them. This credit has to be deemed to be available before the coming into force of the MODVAT Scheme and the respondents have rightly been allowed this benefit of transfer by the learned Collector (Appeals). The respondents could not have taken this credit in the R.G. 23 and had necessarily to await the decision of the authorities. Once the credit was allowed it has to be held that the same will have to be deemed to be available in R.G. 23 as envisaged under Rule 57H(3) for the purpose of transfer of the same to R.G. 23A register. In the above view of the matter I find no merits in the appeal by the Revenue and, therefore, dismiss the same.
