2007 (5) TMI 116 - HC - Central Excise

Cenvat/Modvat - Revenue contended that assessee would not entitle for subsequent taking of short availed credit beyond the period of six month - Held that in respect of the availment of modvat credit there is no restriction during the impugned period and allow the assessee appeal

Issues Involved:
1. Whether the Tribunal was right in allowing the respondents to take differential higher notional credit under Rule 57B at a subsequent stage.
2. Whether the Tribunal was correct in allowing such subsequent taking of credit beyond a period of six months from the date of the original taking of credit.
3. Whether subsequent taking of originally short availed Modvat credit constitutes a refund claim and is subject to the time limit restriction under Section 11B of the Act.
4. Whether the filing of Gate Passes and RT-12 monthly returns by the respondents can be considered as staking a claim at the original stage, thus negating the six-month time limit.

Detailed Analysis:

Issue 1: Differential Higher Notional Credit under Rule 57B
The Tribunal held that in the absence of any provision at the material time against the availment of the amount of credit short availed originally, the respondents were entitled to take the differential higher notional credit under Rule 57B at a subsequent stage. The court agreed with this interpretation, noting that during the relevant period, no specific limitation was prescribed for taking Modvat credit. The respondents initially took credits equal to the duty actually paid by the supplier-manufacturers, who were small scale units, and later took the short availed credit amount. The Tribunal's decision was based on the absence of any explicit prohibition in the Rules for taking such differential credit at a later stage.

Issue 2: Subsequent Taking of Credit Beyond Six Months
The Tribunal allowed the subsequent taking of credit beyond a period of six months from the date of the original taking of credit. The court upheld this decision, emphasizing that no limitation period was prescribed under Rule 57A of the Central Excise Rules during the relevant period. The court referenced the Apex Court's decision in Raghuvar (India) Ltd., which held that there is no specific period of limitation for availing Modvat credit unless explicitly stated. The amendment in Rule 57G, which introduced a six-month limitation, was made on 29th June 1995 and had a prospective effect only.

Issue 3: Refund Claim and Time Limit under Section 11B
The court determined that the subsequent taking of originally short availed Modvat credit does not constitute a refund claim and is not subject to the time limit restriction under Section 11B of the Act. The court cited the Apex Court's decision in Raghuvar (India) Ltd., which clarified that Section 11A of the Act, which deals with the recovery of duties not levied or paid, is not applicable to Modvat credit governed by Rules 57A to 57P. By extension, Section 11B, which deals with refund claims, is also not applicable to Modvat credit.

Issue 4: Filing of Gate Passes and RT-12 Monthly Returns
The Tribunal held that by filing the Gate Passes and RT-12 monthly returns, the respondents had effectively staked a claim at the original stage, and thus, the six-month time limit would not be applicable. The court agreed with this interpretation, noting that the submission of relevant documents at the original stage indicated an intention to claim the full amount of admissible Modvat credit. The Tribunal's decision was based on the principle that the filing of necessary documents at the initial stage negates the applicability of the six-month limitation period.

Conclusion:
The court answered all the questions referred to it in favor of the assessee and against the Revenue. The provisions of Section 11B of the Act were held not to be applicable to Modvat credit, which is governed by Rules 57A to 57P. The respondents were within their rights to avail the shortfall in Modvat credit at any time during the relevant period, as no limitation was prescribed. The Tribunal's interpretation and decisions were upheld, and there was no order as to costs.

← Previous Next →