2010 (9) TMI 1163 - AT - Central Excise

Summary

Issues: Appeal against disallowance of credit under MODVAT scheme for delayed availing of credit, imposition of interest and penalty.

In this judgment, the Hon'ble Bombay High Court ordered the matter to be remitted back to the tribunal for fresh consideration u/s Notification No. 7/99-C.E.(N.T.) and the decision in MRP Limited vs. Commissioner of Central Excise, Mangalore 2007 (208) ELT 19 (Tri.-LB).

The appellant, engaged in manufacturing paint equipments under the MODVAT scheme, faced disallowance of credit for availing it after six months from the return of the Bill of Entry, leading to imposition of interest and penalty.

The appellant contended that a mere seven-day delay should not result in denial of substantial benefit and relied on Notification No. 7/99-C.E. (N.T.) to argue against procedural lapses.

On the other hand, the Revenue cited Rule 57G of the Central Excise Rules, emphasizing the need to avail credit within six months from the issue of duty paying documents, and argued that the notification does not allow for condoning delays in credit availing.

The Tribunal, referring to the decision in MRP Limited case, held that credit cannot be taken after six months from the return of the Bill of Entry as per Rule 57G. The reliance on Notification No. 7/99-CE (NT) was deemed insufficient as it does not extend the period for credit availing.

Citing precedents like Miles India Ltd. vs. Assistant Collector of Customs 1987 (30) ELT 641 (SC) and Collector of Central Excise vs. Doaba Co-Operative Sugar Mills 1988 (37) ELT 478 (SC), the Tribunal upheld the demand for payment along with interest, as per the provisions of Rule 57G and the Larger Bench decision.

Regarding the penalty imposed under Rule 173Q, the Tribunal found it unsustainable post the MRP Limited case and set it aside, modifying the impugned order accordingly.

Ultimately, the appeal was disposed of with the decision to confirm the demand with interest while setting aside the penalty.