S. Kalyanam, Member (J)

1. This is an appeal directed against the order of the Additional Collector of Central Excise, Hyderabad, dated 24-2-88 directing the appellants under Rule 571 of the Central Excise Rules, 1944, hereinafter referred to as the "Rules", to reverse the credit in a sum of Rs. 1,20,567.70 on the ground that the credit taken is not in accordance with law besides imposing a penalty of Rs. 1,000 under Rule 173Q of the Rules.

2. The appellants had taken credit in respect of the duty suffered by cans and barrels, which were used as packing material for fruit products produced by the appellants and cleared. The MODVAT credit taken by the appellants in regard to the said inputs was sought to be reversed on the ground that the appellants were not having the goods on stock as on 1-3-87 or 8-4-87 when the appellants filed a declaration for taking MODVAT credit under Rule 57G of the Rules. The proceedings thus instituted against the appellants eventually culminated in the present impugned order now appealed against.

3. Shri Sriram Panchu, the learned Counsel for the appellants, submitted that the appellants actually had the inputs in question on stock as on 1-3-87 even th