S. Venkatesan, President

1. The question raised in this appeal is whether the Assistant Collector was right in demanding the amount of Rs. 72,825/- of which proforma credit was taken by the respondents under Rule 56A, and subsequently utilised by them against payment and duty on the computers manufactured by them. They situation was created by the fact that on 17-03-1985 Government issued Notification No. 67/85 excepting computers from duty. Consequently, the benefit of Rule 56A became inapplicable to component parts to be used in the manufacture

2. The case of the respondents is that the issue of the notification was subsequent to their taking proforma credit for the component parts, and subsequent also to their utilizing the credit for the clearance of computers manufactured by them. According to them, the credit which was lawful at the time it was taken and the utilization of the credit which was lawful at the time of utilization should not be affected because subsequently computers were exempted from duty. The case of the Revenue is that in terms of Rule 56A(2) and in the light of the exemption notification , they were not entitled to the credit and, therefore, they should p