Outside storage permission does not extend the Modvat credit time limit under Rule 57G(2); delayed credit was disallowed.

Permission to store inputs outside the factory did not extend the statutory six-month period for availing Modvat credit under Rule 57G(2) of the Central Excise Rules, 1944. The credit had been taken after the invoice date had crossed that limit, and the later approval for outside storage was held to govern only the storage arrangement, not the time limit for credit. The Board's instructions on outside storage also did not displace the proviso introduced by Notification No. 28/95-C.E. (N.T.). Credit taken beyond six months was therefore not allowable, and the Revenue's objection was upheld.

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Issues: Whether Modvat credit could be taken beyond the period of six months prescribed under Rule 57G(2) of the Central Excise Rules, 1944, and whether permission granted for outside storage premises could override or neutralise that limitation.

Analysis: The credit was admittedly availed after the expiry of six months from the date of invoice. The permission for storage outside the factory was granted later and could not, by itself, validate earlier storage for the purpose of extending the credit-taking period. The Board's instructions authorising approval of outside storage premises dealt only with storage arrangements and did not state that the statutory time limit for availing credit would cease to apply. The limitation under the proviso to Rule 57G(2), introduced by Notification No. 28/95-C.E. (N.T.) dated 29-6-95, remained operative.

Conclusion: The objection based on outside storage permission was rejected, and the credit taken beyond six months was not allowable. The decision was against the assessee and in favour of the Revenue.

Ratio Decidendi: Permission for outside storage of inputs does not dispense with or extend the statutory limitation for availing Modvat credit under Rule 57G(2) of the Central Excise Rules, 1944.

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