1999 (6) TMI 146 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery of duty amounts under Rule 57G.
2. Interpretation of Rule 57G regarding time limit for taking Modvat credit.
3. Application of Rule 57-I for issuance of notices beyond six months from date of taking credit.
4. Prima facie case on merits and limitation for waiver and stay.

Analysis:

Issue 1: Waiver of pre-deposit and stay of recovery of duty amounts under Rule 57G
The appellants sought waiver of pre-deposit and stay of recovery of duty amounts totaling Rs. 2,28,25,389.23 P and Rs. 2,33,06,345.97 P in Appeal No. 1729/95 and Appeal No. 1730/95 respectively. The recovery was based on the allegation that the appellants had taken credit beyond six months from the receipt of inputs, contravening Rule 57G of the Central Excise Rules, 1944.

Issue 2: Interpretation of Rule 57G regarding time limit for taking Modvat credit
The appellant's counsel argued that Rule 57G did not specify a time limit for taking Modvat credit on duty paid inputs during the relevant period. Citing precedents like Antarctic Industries Ltd. v. Collector of Central Excise, Chandigarh and Hindustan Insulating Co. v. Commissioner of Central Excise, Allahabad, it was contended that credit should be taken within a reasonable time, with no specific time limit under Rule 57G.

Issue 3: Application of Rule 57-I for notices issued beyond six months from date of taking credit
The Departmental Representative argued that even though Rule 57G did not set a time limit, a reasonable time should be implied. Referring to decisions in cases like Commissioner of Central Excise v. Tamil Nadu Petro Products and M.R.F., it was contended that reasonable time varies based on circumstances. The Department argued that the notice issued under Rule 57-I was not time-barred, as the plea of time bar was not raised earlier.

Issue 4: Prima facie case on merits and limitation for waiver and stay
The Tribunal found that the appellants had a strong prima facie case that the demands were time-barred under Rule 57-I(1) as notices were issued beyond six months from the date of taking credit. Citing the case of Himachal Futuristic Communication Ltd. v. C.C.E., Chandigarh, it was held that the limitation period starts from the date of taking credit. Consequently, the Tribunal waived the pre-deposit requirement and stayed the recovery during the appeal's pendency.

The Tribunal scheduled the appeals for hearing in September 1999, considering the delay in processing the stay applications due to the appellant's status as a Public Sector Undertaking and the ongoing hearings of appeals from 1997 and 1998.