1998 (1) TMI 227 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57-I of the Central Excise Rules, 1944 prior to 6-10-1988 regarding the time limit for recovery of wrongly taken Modvat credit.

Analysis:
The case involved a reference application under Section 35G of the Central Excise Act, 1944 to refer a question to the High Court regarding the interpretation of Rule 57-I. The appellant argued that the time limit for issuing a notice for wrong credit should start from the date of taking credit, not from the date of filing RT 12. The Tribunal had previously held that the time limit should start from the date of filing RT 12. The respondent contended that since the matter was remanded for a de novo decision, the reference application was unnecessary, citing a Supreme Court decision. However, the Tribunal found that certain issues were disposed of finally, including the limitation question, and thus the reference application was valid.

The Tribunal noted that there were conflicting decisions on the starting point of limitation for recovery of wrongly taken Modvat credit before and after the amendment of Rule 57-I in 1988. Initially, the rule did not specify the starting point of limitation, but subsequent amendments introduced different starting points. The Tribunal considered that the time limit should start from the date of filing RT 12 before the 1988 amendment. Various decisions by the Tribunal and High Courts supported this interpretation, except for one by the High Court of Gujarat. The Tribunal reasoned that the department would only become aware of wrongly taken credit upon filing RT 12, justifying the starting point of limitation from that date.

The Tribunal rejected the appellant's argument that the time limit should start from the date of credit, as the relevant amendment specifying this date came into effect only in 1988. Since there was no authoritative decision from a higher court on this specific issue, the Tribunal deemed it appropriate to refer the question of law on the starting point of limitation before 1988 to the High Court. The reference application was allowed, and the Registry was directed to prepare a Statement of the case and frame the question of law for the High Court's consideration.