Retrospective credit limitation cannot deny Modvat credit on earlier documents; disputed entries may require factual verification.

A subsequently introduced six-month limit for Modvat credit could not be applied retrospectively to deny credit on documents issued before that limit came into force, so the disallowance on delay was unsustainable. Where the bill of entry/IGM entry contained discrepancies but receipt of the goods was accepted, the disputed credit required fresh factual verification by the adjudicating authority. The assessee obtained relief on the limitation issue, and the remaining credit claim was remanded for re-examination with an opportunity to produce supporting documents.

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Issues: (i) Whether Modvat credit could be denied on the ground that it was taken after more than six months from the date of the documents, when the relevant documents were issued before the introduction of the six-month period; (ii) whether credit could be denied in respect of the disputed bill of entry/IGM entry on the ground that the document was not free from discrepancy and required verification.

Issue (i): Whether Modvat credit could be denied on the ground that it was taken after more than six months from the date of the documents, when the relevant documents were issued before the introduction of the six-month period.

Analysis: The six-month restriction for availing credit was introduced only later, and the documents in dispute were of July and September 1993. The Tribunal applied the principle that a limitation introduced subsequently cannot be used to deny credit on documents predating that change. Reliance was placed on the Supreme Court ruling holding that the limitation provisions under the Central Excise Act did not govern the earlier credit-recovery regime in the manner suggested by the Revenue.

Conclusion: The denial of credit on the ground of delay beyond six months was not sustainable and the assessee succeeded on this issue.

Issue (ii): Whether credit could be denied in respect of the disputed bill of entry/IGM entry on the ground that the document was not free from discrepancy and required verification.

Analysis: Although there was some discrepancy in the document description and some supporting document appeared missing, the Revenue accepted that the goods had been received by the assessee. In these circumstances, the disputed credit entry required fresh examination by the adjudicating authority so that the factual position could be verified on the supporting materials.

Conclusion: The matter was remanded for re-determination on this issue, with opportunity to the assessee to produce supporting documents.

Final Conclusion: The assessee obtained relief against the disallowance based on limitation, while the remaining disputed credit entry was sent back for fresh decision by the adjudicating authority.

Ratio Decidendi: A subsequently introduced credit limitation cannot be applied retrospectively to deny credit on documents issued before its introduction, and where the receipt of goods is admitted but the documentary record is disputed, factual verification may require remand.

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