2006 (8) TMI 421 - AT - Central Excise

Summary

Issues:
Challenge to denial of Modvat credit due to expiry of six months from the date of issue of invoice.

Analysis:
The appeal contested the denial of Modvat credit amounting to Rs. 24,752 by the Commissioner (Appeals) due to the appellant taking the credit after the expiry of six months from the date of the invoice. The goods in question were seized during transit on the date of the invoice, and were only released and received in the factory after the six-month period had lapsed. The authorities held that as per Rule 57G(5), the Modvat credit could not be claimed under these circumstances.

The appellant's counsel argued for a harmonious interpretation of sub-rules (3) and (5) of Rule 57G, citing precedents where the date of clearance from the custody of the Airport authority was considered for computing the six-month period. Additionally, reliance was placed on a Tribunal decision that emphasized the need for a harmonious interpretation of the relevant sub-rules.

On the other hand, the Department's representative supported the lower authorities' findings and highlighted a Larger Bench decision that stated the assessee could not claim Modvat credit on documents issued after six months from their date of issue.

Rule 57G of the Rules of 1944 outlined the procedure for manufacturers to claim credit on duty paid inputs. Sub-rule (3)(c) specified that credit could only be taken upon receiving the inputs in the factory. The judgment emphasized that if goods were seized within the prescribed time limit for claiming credit, the manufacturer could not exercise their right to claim Modvat credit. The court held that the six-month limitation in sub-rule (5) should not apply when circumstances beyond the assessee's control, such as seizure, prevented them from receiving the goods in the factory. Following precedents and the rationale provided, the court set aside the orders denying Modvat credit and granted relief to the appellant.