2014 (2) TMI 544 - AT - Central Excise

MODVAT Credit Claim - whether the mistake committed by the assessee in not reflecting the quantum of credit in RG 23A part II register would disentitle them from the benefit of credit of duty paid on the inputs, especially when the entries has been made in RG 23A Part I record within six months - Held that - Appellant received the imported inputs during the period 15.11.94 to 20.1.95 accompanied with Bills of Entry and duly recorded in their RG 23A Part -I register. There is a delay in taking the credit in the RG 23A Part - II register which they have done in the month of August and September 1995 - assessee received the inputs during the period May to September 1999 and credit was availed in March 2000. Appellants want us to interpret the rule to mean that the rule in question is not applicable in regard to credits acquired by a manufacturer prior to the coming into force of the rule. This we find it difficult because in our opinion the language of the proviso concerned is unambiguous. It specifically states that a manufacturer cannot take credit after six months from the date of issue of any of the documents specified in the first proviso to the said sub-rule. A plain reading of this sub-rule clearly shows that it applies to those cases where a manufacturer is seeking to take the credit after the introduction of the rule and to cases where the manufacturer is seeking to do so after a period of six months from the date when the manufacturer received the inputs. This sub-rule does not operate retrospectively in the sense it does not cancel the credits nor does it in any manner affect the rights of those persons who have already taken the credit before coming into force of the rule in question. It operates prospectively in regard to those manufacturers who seek to take credit after the coming into force of this rule - Therefore Tribunal was justified in holding that the rule in question only restricts a right of a manufacturer to take the credit beyond the stipulated period of six months under the rule - Following decision in COMMISSIONER OF CENTRAL EXCISE, CHENNAI-III Versus FORD INDIA LTD. 2013 (9) TMI 20 - CESTAT, CHENNAI and Osram Surya (P) Ltd. Vs. CCE 2002 (5) TMI 49 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
1. Whether credit availed by the appellant in RG 23A Part-II register after six months is admissible under Rule 57G(2) of the Central Excise Rules, 1944.

Analysis:
The case involved a dispute regarding the admissibility of credit availed by the appellant in the RG 23A Part-II register after six months, as per Rule 57G(2) of the Central Excise Rules, 1944. The appellant, engaged in the manufacture of printed paperboard, received imported inputs within a specific period and recorded the same in their RG 23A Part-I register. Subsequently, they availed credit in the RG 23A Part-II register after the stipulated six-month period. The issue arose when a show-cause notice was issued proposing to disallow the credit taken by the appellant, leading to a demand confirmation under Section 11A of the Central Excise Act, 1944. The Commissioner (Appeals) rejected the appellant's appeal, prompting them to file an appeal before the Appellate Tribunal CESTAT Chennai.

The appellant argued that the credit should not be denied based on the timing of availing it in the RG 23A Part-II register, citing the decision of the Hon'ble Supreme Court in a relevant case. They contended that the amended provisions of Rule 57G(2) should not apply since they had recorded the inputs in the RG 23A Part-I register before the amendment. The appellant relied on precedents like the case of National Steel Industries Ltd. Vs. CCE to support their position.

On the other hand, the Revenue argued that the issue had been settled by previous judicial decisions, including the Hon'ble Supreme Court's ruling in a specific case and the Tribunal's decision in other cases like Kusum Ingots & Alloys Ltd. Vs. CCE. They also referenced the decision in the case of Ashok Leyland Ltd. Vs. CCE to support their stance.

After considering the arguments from both sides and examining the records, the judge found that the appellant had indeed received the imported inputs within the required timeframe and duly recorded them in the RG 23A Part-I register. Although there was a delay in availing credit in the RG 23A Part-II register, the judge noted that similar issues had been addressed in previous cases like Ford India Ltd. The judge referred to the decision in the Ford India case, where the Tribunal had allowed the appeal based on the appellant's compliance with the requirements within the specified period. Consequently, the judge set aside the impugned orders and allowed the appeal with consequential relief, following the precedent set in the Ford India case.

In conclusion, the judgment clarified the application of Rule 57G(2) in the context of availing credit within the stipulated timeframe, emphasizing the importance of compliance with the rules and previous judicial interpretations in similar cases.