1996 (3) TMI 307 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit for bead wire purchased from the open market.
2. Applicability of deemed Modvat credit facility.
3. Time limit for taking Modvat credit under Rule 57G.

Analysis:
1. The appeal challenged the denial of Modvat credit for bead wire purchased from the open market between 1-3-1986 to 15-4-1987. The appellants took consolidated credit entry on 20-9-1989, after the withdrawal of deemed credit facility on 1-3-1986. The lower appellate authority held them ineligible for credit post withdrawal. The appellants argued their right to credit accrued on receipt of goods, citing the Government order of 7-4-1986. They contended that procedural requirements were met, referencing precedents like Amal Rasayan Ltd. and Premier Cables Co. Ltd. The Tribunal noted that the appellants could have taken credit immediately but delayed until 20-9-1989, over two years later. Despite no prescribed time limit, a reasonable period of six months was inferred from prior rulings. The appeal was dismissed due to the claim being time-barred.

2. The issue of deemed Modvat credit facility arose from conflicting Government orders. The appellants relied on the order of 7-4-1986, allowing credit without gate pass, while the facility was withdrawn on 1-3-1986. The Tribunal emphasized that the eligibility for credit is tied to the date of goods receipt. Although no time limit was specified, a reasonable period of six months was deemed appropriate. The Tribunal referenced the Supreme Court's stance on inferring reasonable time limits in the absence of specific directives. As the appellants took credit after the six-month period, their claim was rejected as time-barred.

3. The debate on the time limit for taking Modvat credit under Rule 57G was central to the case. While the appellants argued that their right to credit arose on goods receipt, the Tribunal stressed the importance of timely credit claims. The absence of a specified time limit led to the inference of a reasonable period of six months, aligning with established legal principles. The Tribunal referenced prior decisions to support the imposition of a time limit for credit claims, emphasizing the need for adherence to procedural requirements. Ultimately, the appellants' failure to claim credit within the stipulated period led to the dismissal of their appeal based on the limitation bar.