2004 (2) TMI 589 - AT - Central Excise

Summary

Issues: Denial of Modvat credit for goods not taken within 6 months under Rule 57G, Applicability of Rule 57J for credit without time limit

In this judgment, the issue at hand was the denial of Modvat credit to the appellants for goods not taken within 6 months as required under Rule 57G. The appellants argued that the impugned goods, which were inputs sent to job workers and received back as intermediate goods after processing, should be covered under Rule 57J, which does not prescribe a time limit for taking credit. The appellants cited case laws to support their claim and highlighted the clause "notwithstanding anything contained in these Rules" in Rule 57J to argue that the time limit of 6 months under Rule 57G is not applicable. They also mentioned the subsequent amendment of Rule 57G to extend the period to nine months for taking duty on inputs used in the manufacture of intermediate goods. The Department contended that the appellants did not claim coverage under Rule 57J during earlier proceedings. The Tribunal observed that the appellants were eligible for input duty credit on the impugned goods as the case laws cited favored them, and the time period involved was slightly over 6 months but within the later 9-month period provided in the rules. The appeal was allowed, granting consequential benefit to the appellants.

This judgment clarifies the interpretation and application of Rule 57G regarding the time limit for taking Modvat credit on goods. It also addresses the argument regarding the applicability of Rule 57J, which does not specify a time limit for taking credit on inputs used in the manufacture of intermediate goods. The Tribunal considered the submissions of both parties, including the case laws cited, and concluded that the appellants were entitled to avail input duty credit on the impugned goods. The Tribunal emphasized that the time period slightly exceeding 6 months but falling within the later 9-month period specified in the rules was reasonable, supporting the appellants' claim for credit under Rule 57J. The judgment highlights the importance of considering relevant rules and case laws in determining the eligibility of taxpayers to claim duty credits within the specified time frames.