2004 (12) TMI 609 - AT - Central Excise

Summary

Issues:
Manufacture of Purti Tazgi Masala, Modvat credit on inputs, Invoices dated before six months, Disallowance of Modvat credit, Penalty imposition, Rule 57G restriction, Recovery of amount, Supreme Court decisions applicability, Availment of credit time limit, Prospective effect of amendment.

Analysis:
The case involves a manufacturer of Purti Tazgi Masala availing Modvat credit on inputs used in their final products. The manufacturer took Modvat credit based on Invoices dated 21-2-1995 issued by a supplier, which was found to be before the six-month period from the credit availing date. Consequently, a show cause notice was issued for disallowing the credit of Rs. 1,67,530 and imposing a penalty of Rs. 20,000. The adjudicating authority disallowed the credit and imposed the penalty, a decision upheld by the Commissioner (Appeals) except for setting aside the penalty.

The appellant's advocate argued that there was no restriction under Rule 57G for a six-month limit at the time of credit availing. They contended that since the credit amount was already debited, there should be no further recovery. Citing Supreme Court decisions, the advocate emphasized that once credit is reversed, no additional recovery is warranted. On the other hand, the Revenue representative highlighted that as per Rule 57G, credit cannot be availed if the invoices are issued more than six months before credit taking, as in this case. Referring to a Supreme Court judgment, the Revenue argued that the time limit for credit enforcement is not affected by subsequent amendments.

The Tribunal considered both arguments and upheld the decision disallowing the credit. The Commissioner's findings were deemed correct, stating that credit cannot be taken after six months from the invoice date. The Tribunal noted that subsequent clearance of goods did not alter the situation, as the denial of credit was based on invoices issued before the stipulated period. The Tribunal clarified that the issue was solely about unauthorized credit availing and not about any exemption for credit recovery. Consequently, the appeal was rejected, affirming the denial of credit.

In conclusion, the Tribunal dismissed the appeal, emphasizing that the credit availed was not in compliance with the law due to the invoices being issued before the permissible six-month period. The decision was based on the specific issue of unauthorized credit taking, disregarding subsequent transactions and emphasizing the importance of adhering to legal provisions regarding credit availment timelines.