Judgment:
1. The appellants, herein, manufacture soap falling under Chapter 34 of Central Excise Tariff Act, 1985. They opted to avail of money credit scheme under Central Excise Rules designed to encourage use of unconventional oils in the manufacture of soap. Notification No. 192/87 came to be issued under Rule 57K of Central Excise Rules for the purpose on 12-8-1987. It specified the inputs, namely, vegetable oils, whether or not subjected to processes of hydrogenation or hydrolysis, and the rate of money credit fixed for each such oil. One of the conditions for the money credit is that in cases where the processes of hydrogenation or hydrolysis are done outside the factory manufacturing soap, the credit shall be allowed, inter alia, only if the procedure that may be specified by the Commissioner to establish the identity of the vegetable oils from which such processes oil has been made, is followed and only if the manufacturer produces such documents as may be required by the Commissioner in this regard. In this case the Commissioner concerned issued a Trade Notice prescribing the procedure for establishing (sic) of the oil used, as envisaged in the notification on (sic). The procedure, inter alia, laid down that prior permission had to be obtained before availing of money credit. The appellants in pursuance of the Trade Notice, submitted their application on 4-10-1987 seeking permission retrospectively from the date of notification, i.e. 12-8-1987. Formal permission was granted by Commissioner by a letter dated 28-12-1987. Proceedings were initiated against the appellants by the jurisdictional Assistant Commissioner, Amravati Division by show cause notice issued on 19-4-1988, seeking to disallow money credit Rs. 4,27,572.80, availed during August, 1987 to December, 1987 on the ground that money credit is permissible only prospectively from the date of Commissioner's permission which was granted on 28-12-1987. In his adjudication order dated 26-2-1991, the Assistant Commissioner confirmed the demand. In the appeal against the Assistant Commissioner's order, the Commissioner of Central Excise (Appeals) Indore, passed the impugned order dated 19-8-1992 giving partial relief to the appellants. The Commissioner (Appeals) held that the appellants should be granted money credit from the date of notification 12-8-1987 to the date of Commissioner's Trade Notice issued on 15-9-1987. The present appeal is against this order.
2. We heard Sh. A.K. Gupta, Manager (Legal) of the appellants and Sh.
Satnam Singh, ld. D.R.3. Notification 192/87, dated 12-8-1987 has stipulated that the grant of money credit and utilisation thereof shall be subject to the condition in cases where process of hydrogenation or hydrolysis are done outside the factory manufacturing soap, the credit shall be allowed, inter alia, only if the procedure that may be specified by the Commissioner to establish the identity of the vegetable oils from which such processed oil has been made, is followed.
4. In this case, the notification was issued on 12-8-1987. The Commissioner's Trade Notice prescribing the procedure envisaged there for establishing the identity of the oil was issued only on 15-9-1987, and we find that the Commissioner (Appeals) in this case has rightly held that credit cannot be denied between the date of notification and the date of issue of the Trade Notice. The Commissioner (Appeals) has in this context referred to similar view being taken in Trade Notices issued by other Commissionerates. Having done so, the Commissioner (Appeals), erred in our view, in holding that for the period subsequent to the issue of Trade Notice on 15-9-1987, the appellants could have availed of money credit only on receipt of permission from the Commissioner on 28-12-1987, although admittedly they filed their application as per Trade Notice on 4-10-1987. This is because the object of prescribing the procedure was only to ensure identity of the oil. Records show that before the Assistant Commissioner the appellants had urged that identification of the oil can be established for hardened rice bran oil received by them from another assessee of the same Central Excise Range jurisdiction and in support the appellants had produced copies of the Gate Passes issued by that assessee. In this connection, it is noted that the appellants even while applying for the permission had requested for permission with effect from 12-8-1987 as they had been receiving the specified hydrogenated oil regularly but for which their soap production will be seriously hampered. They were also prepared to substantiate the origin of the oils received with reference to detailed documentary procedures which were already being followed by them for their internal control purposes. The appellants have also claimed that though they had taken the credit on receipt of oils, they had not utilised any of the credit prior to receipt of permission from the Commissioner. In such a context, in the facts of this case, the same logic which was followed by the Commissioner (Appeals) for allowing the money credit for the period 12-8-1987 to 15-9-1987 should apply to the period subsequent to that date till the receipt of Commissioner's permission on 28-12-1987. This is, therefore, an instance, when the object of prescribing the procedure by Commissioner has been complied with in substance, as it is not the case of the department that the said oil had not actually be used for the purpose specified in the notification. The substantial condition of declaration of input oil under Rule 57-O, and the other condition of importance that the input oil must be one of the specified fixed vegetable oils in the notification have undoubtedly been fulfilled in this case. In such a view of the matter, the denial of money credit in this case between 15-9-1987 to 27-12-1987 is unsustainable. The impugned order is set aside and the appeal allowed.