1995 (9) TMI 189 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57G regarding the timing of MODVAT Credit.
2. Compliance with Rule 57G(4) of Central Excise Rules.
3. Application of Tribunal decisions on the time limit for taking MODVAT Credit.

Interpretation of Rule 57G regarding the timing of MODVAT Credit:
The appeal was filed by the Revenue challenging the order of the Collector of Central Excise (Appeals), Madras, which allowed the respondents to claim MODVAT Credit on RG 23A Part II account after a delay ranging from 3 days to 2 months from the date of receipt of goods in their factory. The Revenue contended that Rule 57G mandates the immediate taking of credit upon receipt of goods along with duty paying documents. The Collector (Appeals) was criticized for not observing the clear violation of Rule 57G due to the delayed credit taking. The Revenue argued that the credit should not be allowed unless taken immediately upon receipt of goods with duty paying documents.

Compliance with Rule 57G(4) of Central Excise Rules:
The Revenue also raised concerns regarding Rule 57G(4), which requires manufacturers to submit extracts of RG 23A Part I and Part II registers along with duty paying documents to the Superintendent of Central Excise monthly. The Collector (Appeals) was faulted for allowing entries in Part II register up to six months from the date of entry in Part I register, which was deemed contrary to law. The Collector was accused of not applying the rule correctly by permitting delayed credit taking.

Application of Tribunal decisions on the time limit for taking MODVAT Credit:
The respondents sought a decision on merits, and the Tribunal observed that MODVAT Credit must comply with Rule 57A and notification issued thereunder, along with Rule 57G. While the Revenue argued for immediate credit taking, the Tribunal noted that Rule 57A does not specify a time limit for claiming MODVAT Credit. Citing previous cases and the ruling in Citadel Pharmaceuticals, the Tribunal determined that a reasonable time limit of 6 months for taking MODVAT Credit should be acceptable. As the MODVAT Credit in this case was claimed within 6 months of goods receipt, the Tribunal found no fault in the lower appellate authority's decision. Consequently, the appeal by the Revenue was dismissed, and the cross-appeal was deemed not maintainable in law.