Judgment:
1. On hearing both sides on the Stay application, it appeared that on a short point the appeal itself could be decided. This was done by granting waiver of pre-deposit of Rs. 20,03,716.85, confirmed as duty and penalty of Rs. 1 lakh imposed on the appellants.
2. We have heard Shri J.C. Patel for the appellants and Shri J.M.Jeorge for the Revenue.
3. The appellants M/s. Inox India Ltd. had two plants called as Unit No. 1 and Unit No. 2 situated adjacent to each other. Both had separate Central Excise Registration Numbers. Both Registration Certificates showed the manufacturers as Inox India Ltd. As a later date the appellants saw a Trade Notice 1994 (74) E.L.T. T-5. In terms of the Trade Notice, the facility of having one Registration for two or more units situated in adjoining premises owned by the same manufacturer was offered. The appellants therefore sought cancellation of one registration so as to bring both units inside one registration. This application was made on 25-11-1996. The credit balance available in the 23A Part-II register as well as 23C Part-II register of the unit the registration of which was cancelled were transferred to the equivalent register of the consolidated unit.
4. Two show cause notices were issued seeking denial of the credit so transferred on the ground that the transfer had been made without following the provisions of Rule 57F(7) of the Central Excise Rules, 1944. The Assistant Commissioner in his common order confirmed duty as mentioned above. He also imposed a penalty of Rs. 10 lakhs on the assessee. In his order he denied the claim of the assessee that the Rule was of a procedural nature and failure to comply therewith would not deny the assessees of the substantive benefit. The assessees then filed an appeal. The Commissioner (Appeals) held the requirement under the rules was to obtain prior permission of the Collector. He denied the suggestion that it was merely a procedural requirement. He dismissed the appeal but reduced the penalty from Rs. 10 lakhs to Rs. 1 lakh. Hence the present appeal.
5. Reliance was placed before the Commissioner on CEGAT order reproduced in 1994 (72) E.L.T. 91 (Tribunal). We find no relevance in the citation which relates to the erstwhile Rule 56A. We also do not find much relevance in the other citations made in the appeal memorandum.
"On an application made by a manufacturer, the Commissioner of Central Excise may, subject to such conditions and limitations as he may impose, permit a manufacturer having credit in his account in Form RG-23A maintained under Rule 57G and lying unutilised on account of change in ownership or change in the site of a factory resulting from sale, merger, amalgamation or transfer to a joint venture with the explicit provision for transfer of liabilities of the old factory, to transfer such unutilised credit to such sold, merged, amalgamated or transferred factory." 7. The sub-rule would come into play on the existence of the eventualities narrated therein. In such a situation the manufacturer who had secured the credit is required to approach the Commissioner for permission to transfer such credit. The Commissioner would examine the records to ensure that the credit was correctly taken. He might also check the arithmetical accuracy. In the case of capital goods credit he may cause verification of the existence and the installation of the machinery. The verification is to ensure that no unwarranted credit is being taken when the ownership is changed or factory is relocated. The situation in the present appeal is different. The manufacturer continues to be the same. There is neither change in the ownership nor in the site of factory. All that happened was the merger of the registration certificate and not of the units.
8. In this situation we find that the sub-rule does not come into play at all. The proceedings instituted under this belief therefore do not survive. This appeal is allowed with consequential relief.