2010 (3) TMI 160 - HC - Central Excise

Modvat Credit - Demand for the period prior to 6.10.1988 - the manufacturer wrongly availed the modvat credit, during the period 7.4.86 to 12.4.86 on certain items without filing declaration for them under Rule 57-G of the Central Excise Rules,1944. The revenue had raised a demand for recovery of wrongly availed modvat credit in April, 1987. The question is whether prior to 6.10.88, there was any limitation to claim recovery of wrongly availed modvat credit. Held that Section 11-A of the Central Excise Act was not on the statute book when the demand was made in April, 1987. This provision was inserted on 6.10.1988 and as the demand of recovery of wrongly availed modvat credit was prior to 6.10.88, hence, there was no question of any limitation claiming the recovery. Resultantly, the question posed is answered in favour of the revenue and against the assessee.

Summary

The High Court of Punjab and Haryana addressed whether Rule 57-I of the Central Excise Rules, 1944 was subject to Section 11A of the Central Excise Act, 1944 before 6.10.88. The court ruled that as the demand for recovery of wrongly availed modvat credit was made before 6.10.88 when Section 11-A was not in effect, there was no limitation on claiming the recovery. The decision favored the revenue over the assessee.