2009 (10) TMI 307 - HC - Central Excise

Cenvat Credit- Limitation- Credit taken after expiry of six months from date of issuance of duty paying documents. Once period of limitation has begun no subsequent event can stop it. Sub Rule (5) of Rule 57G of erstwhile Central Excise Rule 1944 admits no exception whatsoever for consideration of any claim of Modvat Credit after expiry of period of six months from the date of commencement of period of limitation. The law of limitation is based on delay and laches. It does not bar the right but the remedy. One of the most important and universal rules is that time when it has once commenced to run in any case will not cease to do so by reason of any subsequent event which may be within the saving of the statute. The law of limitation is not one of substance but of procedure. The object of prescribing limitation is to put an end to litigation or to state it in other words litigation may attain finality.

Summary

Issues:
1. Interpretation of Rule 57G(5) of the Central Excise Rules, 1944 regarding Modvat credit.
2. Applicability of the six-month limitation period for claiming Modvat credit.
3. Whether differential credit taken after six months of issuance of duty paying documents is allowed.
4. Impact of the judgment in Osram Surya (P) Ltd. case on the present case.

Issue 1: Interpretation of Rule 57G(5) of the Central Excise Rules, 1944 regarding Modvat credit:
The case involved a dispute over the interpretation of Rule 57G(5) of the Central Excise Rules, 1944 concerning the admissibility of Modvat credit. The applicants were manufacturing steel products and availing Modvat credit up to 95%, which was later increased to 100%. The controversy centered around the differential credit of 5% claimed after six months of issuance of duty paying documents.

Issue 2: Applicability of the six-month limitation period for claiming Modvat credit:
The key question was whether the six-month limitation period under Rule 57G(5) barred the applicants from claiming the additional 5% Modvat credit after the initial credit was taken within the prescribed period. The lower authorities had held that the differential credit taken after six months was not permissible based on the rule and the judgment in Osram Surya (P) Ltd. case.

Issue 3: Whether differential credit taken after six months of issuance of duty paying documents is allowed:
The applicants argued that the bar of the six-month period should not apply as the necessary documents for claiming the additional credit were already submitted to the department. They contended that since a part of the credit was granted within the time limit, they should be allowed to claim the differential credit at any time.

Issue 4: Impact of the judgment in Osram Surya (P) Ltd. case on the present case:
The judgment in Osram Surya (P) Ltd. case was cited by both parties to support their arguments. The court noted that the said judgment clarified that Rule 57G(5) operated prospectively and restricted the right of manufacturers to claim credit beyond the specified period. The court emphasized that the rule was a period of limitation that limited the manufacturer's right to claim credit within the stipulated time frame.

In conclusion, the court dismissed the application, upholding the lower authorities' decision that the differential credit claimed after six months was barred by Rule 57G(5). The court emphasized the importance of adhering to the statutory limitation period for claiming Modvat credit and rejected the applicant's argument based on principles of interpretation and previous judgments.