1992 (9) TMI 190 - Commissioner - Central Excise

Summary

Issues:
- Maintainability of the order by the Assistant Collector regarding the modvat credit.
- Interpretation of Rule 57G and relevant notifications.
- Applicability of time limit for taking modvat credit after receipt of inputs.

Analysis:
The appeal was filed against an order confirming a demand for late availing of modvat credit by the Assistant Collector Central Excise. The appellant, a manufacturer of iron and steel products, contended that the modvat credit was taken in accordance with Rule 57G and there was no specified time limit for availing the credit. The Assistant Collector disallowed the credit citing non-receipt of duty paid documents on time. However, the appellant argued that there was no time limitation for taking modvat credit after receipt of inputs, relying on a case law precedent (Premier Cables Co. Ltd., 1991 (56) E.L.T. 853). The Assistant Collector's order was challenged on the grounds of maintainability due to the absence of a specified time limit under the Rules.

During the hearing, the appellant reiterated that there was no stipulated time limit for availing modvat credit and cited case law to support their argument. The Assistant Collector had based the disallowance of modvat credit on the requirement that goods should be accompanied by duty paid documents under Rule 57G(2). However, the Commissioner disagreed with this interpretation, citing a Tribunal case (Mysore Lac and Paints Works Ltd., 1991 (52) E.L.T. 590) which allowed a reasonable time of 6 months for taking credit due to late receipt of documents. The Commissioner emphasized that the modvat credit cannot be denied solely based on a delay of 3 to 10 days in availing the credit.

Furthermore, the Commissioner clarified the amendments made by Notifications 25/87 and 117/87 regarding the requirement of duty paying documents for availing modvat credit. The Assistant Collector's interpretation of the notifications was deemed incorrect, as the current position allowed for inputs to be received under the cover of duty paying documents without a specified order of arrival. The Commissioner concluded that the Assistant Collector's order was erroneous and not sustainable in law, ultimately allowing the appeal against the demand for modvat credit.

In the final order, the Commissioner allowed the appeal based on the reasoning provided, emphasizing the absence of a specified time limit for availing modvat credit after the receipt of inputs and rejecting the Assistant Collector's interpretation of the relevant rules and notifications.