2007 (7) TMI 128 - AT - Central Excise

Cenvat/Modvat Revenue contended that appellant is not entitle to take Modvat credit in February 2000 on strength of the invoices issued prior to 7-3-95 on the ground of that the limit to utilise the credit within 6mths from the issue of documents Allowed the revenue appeal

Summary

Issues:
Challenge to disallowance of Modvat credit by the Commissioner (Appeals) based on Rule 57G of the Central Excise Rules, 1944.

Analysis:
The appellant contested the disallowance of Modvat credit amounting to Rs. 1,96,298/- by the Commissioner (Appeals). The dispute revolved around the credit taken by the appellant between 20th March 1994 to 15th March 1995. The appellant argued that the credit was lawfully taken based on a prior Tribunal order in their favor (Final Order No. A/171/98 [1998 (102) E.L.T. 381 (Tribunal)]). However, the Revenue contended that the credit was taken in contravention of Rule 57G of the Central Excise Rules, 1944, as it existed at the relevant time, specifically related to HDPE bags/sacks and duty paying documents issued before 7-3-1995.

The Revenue highlighted that Rule 57G imposed a time limit on taking credit, as evidenced by subsequent amendments. The Tribunal referred to decisions in CCE, Vadodara v. Usha Prestressed Sleepers Udyog and Unipatch Rubber Ltd. v. CCE, Indore, emphasizing that such credit could not be taken beyond six months from the date of receipt of the inputs. The Tribunal in Unipatch Rubber Ltd. specifically noted the categorical nature of the time limit set by the amendment dated 29-6-1995.

The Tribunal addressed the amendments to Rule 57G, particularly the insertion of a proviso on 29-6-1995 and subsequent amendments in sub-rule (5) of Rule 57G. The appellant's reliance on their previous Tribunal case was deemed misplaced, as the period in question differed, and the Tribunal had previously established a reasonable period of six months from the date of receipt of inputs for taking Modvat credit. Since the credit in question was taken in February 2000 based on invoices issued prior to 7-3-1995, almost five years after the stipulated six-month period, the Commissioner (Appeals) rightfully upheld the disallowance of Modvat credit, directing its reversal/payment with interest and imposing a penalty of Rs. 20,000. Consequently, the appeal was dismissed.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi underscores the interpretation and application of Rule 57G in the context of Modvat credit disallowance, emphasizing the importance of adherence to prescribed time limits and legal precedents in excise matters.