2006 (7) TMI 224 - HC - Central Excise

Summary

Issues:
1. Interpretation of Rule 57G(5) of the Central Excise Rules regarding the time limit for availing credit of duty paid.
2. Validity of taking credit after the lapse of six months from the date of issue of the document.
3. Applicability of Modvat scheme provisions in relaxing the time limit prescribed under Rule 57G(5).

Analysis:
1. The judgment revolves around the interpretation of Rule 57G(5) of the Central Excise Rules, which mandates that a manufacturer must take credit of duty paid within six months from the date of issue of the specified document, such as a Bill of Entry. The case involved an assessee who imported inputs and took credit after the lapse of the stipulated six-month period, leading to a show cause notice proposing to deny the irregularly taken credit.

2. The Assistant Commissioner initially denied the credit and imposed a penalty, which was upheld by the Commissioner (Appeals), emphasizing the absence of provisions to relax the time limit prescribed under Rule 57G(5). Subsequent appeals and remands ultimately led to the Customs, Excise and Service Tax Appellate Tribunal allowing the appeal by the assessee, citing the entry of goods in the register within six months as sufficient for credit. However, the Revenue challenged this decision, questioning the legality of allowing credits taken after the expiry of the six-month time limit specified in the rule.

3. The High Court analyzed the legal position and referred to a Supreme Court judgment in a similar context, affirming that a manufacturer cannot take Modvat credit after six months from the specified document's date. The court held that the rule restricts a manufacturer's right to take credit beyond the stipulated period and operates prospectively. Consequently, the court ruled in favor of the Revenue, setting aside the appellate Tribunal's decision and allowing the appeal without costs.