2011 (5) TMI 777 - AT - Central Excise

Cenvat credit - SCN issued alleging that the credit taken in February, 2002 on inputs received during the period 28-3-1994 to 7-3-1995 was not eligible as relevant documents are not dated prior to 6 months in violation of conditions under Rule 57G(5) Held that - inputs received have been duly accounted in RG 23 A Part I and entries were made contemporaneously but the credit was not taken in RG 23A part II at the instance of the jurisdictional Central Excise authorities and that the time limit of six months was introduced only with effect from 29-6-1995. Therefore, the appellants taking the credit in February 2000 and utilising the same cannot be held improper. They have no incentive to take the credit belatedly, delay has been caused at the instance of Central Excise authorities, order is set aside and appeal is allowed

Summary

Issues:
Appeal against Commissioner (Appeals) order dated 31-5-2005 regarding credit on inputs received during 28-3-1994 to 7-3-1995, disputed eligibility, and time limit for taking credit under Rule 57G.

Analysis:
The appeal challenged the order of the Commissioner (Appeals) regarding the eligibility of credit on HDPE bags received during 28-3-1994 to 7-3-1995. The dispute arose when the appellants took credit on these inputs in February 2002, leading to a show cause notice alleging ineligibility due to document dating violations under Rule 57G(5). The original authority upheld the demand and imposed penalties, which was affirmed by the Commissioner (Appeals).

The appellant argued that Circular No. 4/91 CX.8 issued by the Board in 1991 provided guidelines for disputed input credits, emphasizing the need for resolution within six months. They highlighted previous show cause notices and a Tribunal decision in their favor in 1998, asserting that the time limit restriction introduced in Rule 57G from 29-6-1995 should not apply retroactively.

A significant legal question referred to the Division Bench concerned the starting point for the time limit under Rule 57G, which was clarified to be the date of issuance of relevant documents, not the entry in RG-23 A registers. The appellant contended that they complied with guidelines, entered details in RG 23A Part I, and refrained from taking credit based on the Superintendent's directive until a favorable Tribunal decision in 2000.

The Tribunal noted that the appellants followed Board guidelines, entered details in RG 23A Part I, and refrained from taking credit due to the ongoing dispute and freezing of credit by the Superintendent in 1994. Since the time limit of six months was introduced in 1995, the appellants' credit taken in 2000 and utilized thereafter was deemed appropriate, with the delay attributed to Central Excise authorities. Consequently, the lower authorities' orders were set aside, and the appeal was allowed with consequential relief in accordance with the law.