2007 (8) TMI 546 - AT - Central Excise

Revenue's Modvat credit appeal dismissed due to time-barred show cause notice

The appeal by the Revenue against the disallowance of Modvat credit on a 'Closed Loop Water Chilling Machine' was dismissed by the Appellate Tribunal ... Cenvat/Modvat - Capital goods Issues:- Appeal against disallowance of Modvat credit on a 'Closed Loop Water Chilling Machine.'- Dispute over the admissibility of credit under Chapter heading 8418.10.- Calculation of the limitation period for issuing show cause notice.- Validity of the show cause notice timeline.- Decision on the appeal based on the limitation period.Analysis:1. The appeal was filed by the Revenue against the order of the Commissioner (Appeals) disallowing Modvat credit amount of Rs. 1,23,300/- availed by the respondent on a 'Closed Loop Water Chilling Machine.' The issue revolved around the exclusion of Chapter heading 8418.10 from the list of capital goods during the relevant period, leading to the Revenue claiming the credit as inadmissible.2. The respondent had taken Modvat credit on 28-1-1998 for the machine falling under Chapter heading 8418.10. The Revenue issued a show cause notice on 27-5-1999, proposing disallowance of the credit due to the exclusion of the chapter heading. The adjudicating authority considered the submission of complete return made on 30-12-98, based on the late submission of original invoices, and deemed the show cause notice timely within the six-month period under Rule 57-U of the Central Excise Rules, 1944.3. The Appellate Commissioner disagreed with the adjudicating authority's computation of the relevant date from 30-12-98, stating it was incorrect and lacked a basis. Consequently, the order-in-original disallowing the credit was set aside, leading to a dispute over the validity of the show cause notice timeline.4. The department's representative argued that since the original invoice was not submitted with the return, the limitation period should not have been calculated from the return filing date. It was contended that the return was complete only upon the submission of both original invoices on 30-12-1998. The representative sought to set aside the Commissioner (Appeals) order based on the completeness of the return submission.5. The judgment highlighted Rule 57-U(1) and Rule 57T(10) of the Central Excise Rules, 1944, regarding the timeline for issuing show cause notices for credit disallowance. It was noted that the show cause notice issued on 27-5-1999 was beyond the six-month period from the filing of the return on 5-11-1998, rendering it time-barred. The Commissioner (Appeals) decision on the show cause notice being time-barred was upheld, leading to the dismissal of the appeal by the Appellate Tribunal CESTAT, NEW DELHI.(Order dictated and pronounced in the open Court)