1999 (5) TMI 93 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit beyond six months from the date of the invoice.
2. Retroactive application of Rule 57G amendment.
3. Overriding effect of Rule 57J.
4. Interpretation of conflicting rules.

Analysis:
1. The case involved the denial of Modvat credit to manufacturers of polyester film due to taking credit beyond six months from the invoice date. The denial was based on an amendment disallowing credit after six months, introduced by Notification 28/95. The appellants argued against the retrospective application of this amendment, citing legal precedents.

2. The appellants contended that the Rule 57G amendment could not have retrospective effect, as per legal principles established by the Apex Court. They also referenced a Tribunal case to support their stance that the limitation of six months for credit under Rule 57G(2) did not have a retrospective effect. Additionally, they invoked Rule 57J, emphasizing its overriding nature as per a Supreme Court judgment.

3. The Respondent argued that the denial of credit was justified, citing a Tribunal judgment and asserting that Rule 57J did not override the time limit stipulated in Rule 57G. They claimed that a subsequent amendment in December 1996 to Rule 57J clarified the time limit issue and should be applied retrospectively.

4. The Judge analyzed the arguments, citing a previous Tribunal case to support the view that Modvat credit is a vested right that cannot be divested without clear legislative intent. The Judge noted that Rule 57J, which had no time limit provision at the relevant time, should take precedence over Rule 57G. The Judge differentiated the present case from the Osram Surya Pvt. Ltd. case, emphasizing the unique circumstances in each.

5. Ultimately, the Judge found merit in the appellants' argument, ruling that the credit denial was incorrect as Rule 57J's overriding effect applied, even if the retrospective aspect of Rule 57G was disregarded. The Judge overturned the lower authorities' decision, allowing the appeal and granting consequential relief to the appellants.