2013 (9) TMI 20 - AT - Central Excise

MODVAT Credit Claim - Whether the mistake committed by the assessees in not reflecting the quantum of credit in RG-23A Part II register would disentitle them from the benefit of credit of duty paid on the inputs - Held that - A manufacturer becomes entitled to take credit immediately on receipt of the inputs without any further formality - The amount of credit was to be simplicitor written in the records - the provisions of sub-rule (7) of Rule 57G require a manufacturer to maintain an account in form RG- 23A, Part I and Part II - entries in RG-23A Part I itself would entitle an assessee to avail the credit and the entries in RG-23A Part II is only for accountal purposes - As such, it was clear that RG-23A Part-II was only for the purpose of reflecting upon the quantum of credit taken, utilised and balance of the same - RG-23A Part II does not confer substantive right to the assessee for availment of credit. Bar of Limitation - when the entries stand made in RG-23A Part I within a period of six months, the availment of credit after six months period was permissible or not - Held that - An assessee would be entitled to take the credit even after a period of six months - the time-limit of six months in availing the credit had been introduced with the sole objective of avoiding the evil of taking the credit in respect of inputs which had been cleared by the input manufacturer more than six months back - Relying upon COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Versus AUROBINDO PHARMA LTD. 2000 (10) TMI 93 - CEGAT, CHENNAI - The said provision cannot be pressed into service to deny the otherwise available substantive benefit of credit, to an assessee who had received the goods within the period of six months from the date of clearance from the input manufacturer s factory and has duly made entries in RG-23A Part-I record - ultimately the period of six months introduced in the said rule was withdrawn by the legislature with effect from 1-4-2000 - There were no merits in the Revenue s appeal and reject the appeal.

Summary

Issues:
Appeal against Commissioner (Appeals) order on MODVAT credit availed on inputs. Interpretation of Tribunal decisions on credit availment timelines. Applicability of Osram Surya case. Entitlement to MODVAT credit despite delay in RG-23A Part II entries. Impact of Rule 57AG on credit availment. Dispute resolution on credit availment timelines and procedural aspects.

Analysis:
The appeal was filed by Revenue challenging the Commissioner (Appeals) order allowing MODVAT credit on inputs. The Tribunal recalled its earlier rejection of Revenue's appeal, considering the Supreme Court's decision in Osram Surya case. The Revenue argued that Osram Surya case precedent should apply to disallow credit after six months. However, the Respondent contended that Osram Surya case was different and not applicable to the present case.

The Respondent highlighted Rule 57AG, enabling credit availment without a time limit post 1-4-2000. They argued that credit should be allowed if inputs were received and entered in RG-23A Part I within six months. The Tribunal noted that inadvertent mistakes in RG-23A Part II entries should not disentitle credit if Part I entries were made within the timeline.

The Tribunal analyzed Rule 57G provisions, emphasizing immediate credit availment on input receipt. Entries in RG-23A Part I entitled the assessee to credit, with Part II entries for accounting purposes only. The Tribunal stressed that delay in formalities should not deny credit if inputs were received within six months.

The Tribunal discussed the purpose of the six-month limit, emphasizing its withdrawal in 2000 to prevent undue denial of credit. Consequently, the Tribunal rejected the Revenue's appeal, affirming the entitlement to credit despite delays in RG-23A Part II entries.

The Tribunal also addressed a miscellaneous application for additional issues, which was dismissed as the main appeal was decided in favor of the Respondent. The judgment concluded by rejecting the Revenue's appeal and disposing of the miscellaneous application.

In summary, the judgment clarified the procedural aspects of credit availment, emphasizing the importance of timely entries in RG-23A Part I for entitlement to credit. The Tribunal upheld the Respondent's right to credit despite delays in Part II entries, highlighting the withdrawal of the six-month limit post-2000 to prevent unjust denial of legitimate credit benefits.