2006 (1) TMI 21 - AT - Central Excise

Central Excise Cenvat credit Reasonable time limit to obtain Cenvat credit extended to one year

Summary

Issues:
The issue involves the interpretation of Rule 57AA of the CE Rules regarding the time limit for taking modvat credit and the applicability of the time period mentioned in Section 11A of the Central Excise Act.

Interpretation of Rule 57AA - Time Limit for Taking Modvat Credit:
The appellants, manufacturers of "Pet bottles," were served with a Show Cause Notice for recovery of modvat credit taken by the assessee in February 2001 based on input invoices received between April 2000 and November 2000. The Revenue contended that the credit cannot be taken beyond six months, while the assessee argued that the provision itself allows them to take the benefit without any time restriction. The assessee relied on four citations to support their argument. The Tribunal agreed with the assessee's reasoning, stating that the provision of Section 11A had been amended to extend the time for recovery to one year. Therefore, taking credit within one year is considered within a reasonable period, in line with the amended provision.

Applicability of Section 11A Time Limit:
The learned SDR argued that even though Rule 57AC does not specify a time period, there should be a reasonable limit for taking credit, and referred to a judgment cited in the Grounds of Appeal. The learned Counsel for the appellants highlighted that the proviso to Section 11A and 11B has been amended to extend the time limit to one year. The Tribunal agreed with the Counsel's argument, emphasizing that the time limit of six months mentioned in previous judgments was based on the old provision of Section 11A. Since the current period falls after the amendment to Section 11A, the one-year time limit should be applied to the rules. Therefore, the Tribunal rejected the Revenue's appeal, affirming that taking credit within one year aligns with the amended provisions of Section 11A.

Conclusion:
After careful consideration, the Tribunal found merit in the appellant's argument regarding the extended time limit for taking modvat credit in accordance with the amended provision of Section 11A. The Tribunal rejected the Revenue's appeal, stating that the appellant's action of taking credit within one year was within a reasonable period as per the amended provisions.