1. This is an appeal under Section 35-B of the Central Excises and Salt Act, 1944 filed by M/s. Swastick Laminart Industries (Pvt.) Ltd., Rajkot, against the Order No. V.68/15-57/OA/82/Raj dated 31-7-82 of the Collector of Central Excise, Ahmedabad under which the Collector has reviewed the Order No. V.68(15)-2/81/OA dated 5-1-1982 of the Assistant Collector of Central Excise, Rajkot and under which the Collector had directed the present appellants to pay duty of Rs. 1,27,811.64, under Rule 56-A(5)(i) of the Central Excise Rules, 1944 as the Collector held that the appellants wrongly utilised credit of this amount in paying duty of Central Excise on plastic laminated sheets manufactured by the appellants and classifiable under Item 15-A of the Central Excise Tariff. Advocate Shri Satodia has contended that the appellants had the permission to have the benefit of Rule 56-A from the Assistant Collector of Central Excise, Rajkot and earlier from the previous jurisdictional officer viz. Asstt. Collector of Central Excise, Jamnagar. As per the permission granted by the Asstt. Collector the appellants had been following the prescribed procedure and maintaining the prescribed records and registers. Pursuant to the conversion of the appellant from a partnership concern to a Private Limited Company the appellants obtained the L-4 licence in the new name and also applied to the Collector of Central Excise, Ahmedabad in their letter dated 4-2-80 to permit transfer of credit and the balance of raw material in stock on 19-9-80 from the old R.G. 23 Register to the credit of the new Company. However, the appellants received the permission from the Assistant Collector of Central Excise, Rajkot under his letter dated 30-4-81. But the Asstt. Collector in his show cause notice dated 24-11-81 asked the appellant to show cause why the amount equivalent to the credit should not be recovered from them under Rule 56-A(5) and why a penalty should not be imposed on them under Rule 56-A(4). The Collector after considering the explanation of the Company finally dropped the proceedings under Rules 56-A(4) and (5) on the grounds that the appellant had committed a technical error only and that it did not involve any loss of revenue. However, Collector of Central Excise, Ahmedabad reviewed the aforesaid order of the Asstt. Collector, Central Excise, Rajkot on the grounds that the Assistant Collector did not have the authority under Rule 56-A(5) for permitting the transfer of the credit from the old to the new licensee and that such permission should have been granted only by the Collector. The Advocate stated that the Collector's decision for denying the credit was very harsh as the appellant was not at all at fault when the Asstt. Collector granted the permission even though he was not authorised to do so. In any case, the appellants' request in their letter dated 4-12-80 was still pending with the Collector and the Collector could have exercised discretion and granted the request. Besides, the Collector in his order dated 31-7-82 did not revoke or modify the order dated 5-1-82 of the Assistant Collector of Central Excise, Rajkot that the Collector only directed payment of duty amounting to Rs. 17,811.64 in terms of Rule 56-A(5)(i). The Collector's order dated 31-7-o2 further presumes that the demand for this amount of duty had been issued earlier by the Superintendent, Central Excise, Wankaner. But this was not so as no such demand had been issued by the Superintendent. The Advocate stated that para 8 of the show cause notice issued by the Collector for the review of the Asstt. Collector's decision would confirm this position.
Besides, he argued that the Company had filed the relevant R.T. 12 returns showing the duty paid through P.L.A. and through debit of the R.G. 23 account, and all these R.T. 12 returns had been assessed by the Superintendent, Central Excise and one copy had been returned to the appellant. The Collector's order under appeal demanding duty was, therefore, time barred. The Advocate, further, contended that the permissions granted by the Asstt. Collectors of Central Excise, Rajkot and Jamnagar for availing the benefit of Rule 56-A procedure were still in existence and they had not been revoked. Therefore, there was no case for demand of duty as directed by the Collector. The Advocate, therefore, requested that the Collector's order should be set aside and the appeal should be allowed.
2. The learned departmental representative has contended that during the relevant time the Asstt. Collector did not have the power for granting permission for the transfer of credit in the R.G. 23 account of a previous licensee to his successor. Therefore, the Collector's order reviewing the Asstt. Collector's decision was quite correct in law. Besides, para 11 of the procedure annexed to Notification No.209/79, dated 4-6-79 empowers the Collector only to grant the permission. Hence, the Assistant Collector's permission has got no effect. In answer to the query from the Bench, the departmental representative confirmed that the records of the case with him did not indicate that any show cause notice had been issued by the Supdt.
Central Excise, Wakaner, demanding duty from the appellants or their predecessor for repayment of duty where credit had been wrongly utilised by them.
3. We have examined the submissions in the appeal and of the respondent. We find that the Collector of Central Excise, Ahmedabad in his Order dated 31-7-82 does not say that there was any lapse on the part of the appellant. He has denied the benefit of the proforma credit only on the grounds that the necessary permission was given not by the Collector but by the Assistant Collector. We find that this is not an equitable order in the circumstances of the case where the assessee had been made to suffer the loss of the credit where the fault was not his.
We find that in the circumstances of the case, the Collector should have exercised his discretion in favour of the assessee and confirmed the permission for the transfer of the credit given by the Assistant Collector of Central Excise, Rajkot. Since this has not been done, we feel that in the interest of justice, we should do so now. Accordingly, we set aside the order of the Collector of Central Excise, Ahmedabad dated 31-7-82 and allow the appeal.