Appellate Tribunal allows Modvat credit for Wireless Sets & TVs, Rs. 26,83,800 saved.

The Appellate Tribunal CESTAT, Mumbai allowed the appeal of the manufacturers of Wireless Sets/Radios and Colour Television, setting aside the disallowance of Modvat credit amounting to Rs. 26,83,800/- under Rule 57G(5) of the Central Excise Rules, 1944. The Tribunal held that the credit was admissible as it was taken within a reasonable time frame following the receipt of inputs into the factory premises, in line with the Cenvat Credit Rules 2001 which did not specify a time limit for availing credit. The appeal was allowed without addressing other arguments raised by the appellants.

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Issues involved: Disallowance of Modvat credit u/s Rule 57G(5) of the Central Excise Rules, 1944 for taking credit beyond the prescribed time limit.

In this judgment, the Appellate Tribunal CESTAT, Mumbai addressed the issue of disallowance of Modvat credit amounting to Rs. 26,83,800/- to the appellants, who are manufacturers of Wireless Sets/Radios, Colour Television, and sub-assemblies falling under Chapter 85 of the Schedule to the CETA 1985. The disallowance was based on the ground that the credit was taken beyond the stipulated period of six months from the date of issue of the bills of entry, contrary to Rule 57G(5) of the Central Excise Rules, 1944.

The appellants had filed bills of entry and paid Basic Duty and Additional Customs Duty in December 1999 and February 2000 for goods initially imported for trading purposes, without liability to pay Special Additional Duty (SAD). Subsequently, they decided to utilize the inputs for manufacturing Colour T.V. and paid SAD on 10-1-01. The goods were received in the factory premises between December 2000 and April 2001, with credit of CVD being availed in March and April 2001.

The Tribunal acknowledged the appellants' argument that at the time of availing credit in March and April 2001, the Cenvat Credit Rules 2001 were in force and did not specify any time limit for taking credit. It was noted that credit could be availed immediately upon receipt of input into the factory, which occurred between December 2000 and April 2001, with credit taken in March and April 2001 following the receipt of the full consignment of inputs. Consequently, the Tribunal held that the credit was admissible to the appellants, setting aside the impugned order and allowing the appeal without delving into other raised pleas such as the inapplicability of the restriction in Rule 57G(5) to credit taken on the strength of Bill of Entry or the relevant date for computing the six months period being 10-1-01 when SAD was paid.

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