2000 (7) TMI 108 - AT - Central Excise

Modvat credit on older duty-paying documents under amended Rule 57G time limit upheld; credit barred after six months.

The dominant issue was whether, after amendment of Rule 57G of the Central Excise Rules, Modvat credit could be taken on the strength of duty-paying ... Modvat - Duty paying documents - limitation of time under Rule 57G - manufacture of excisable goods - Whether in cases where credit has been taken after the amendment to Rule 57G of Central Excise Rules on the strength of duty paying documents issued prior to the amendment the Revenue can deny the credit in respect of such documents on the ground that credit has been taken after six months from the date of issue of duty paying document in view of the amendment to Rule 57G of Central Excise Rules. - HELD THAT:- If a manufacturer wants to avail the benefit of Modvat credit in respect of inputs used in or in relation to the manufacture of final product on payment of duty on such final products under Rule 57A of the Central Excise Rules, he should follow the procedure laid down under the Modvat Scheme. The contention of the appellants is that if on the inputs the manufacturer had already paid the duty on the basis that when the goods are utilised in the manufacture of final product then tax on these goods are to be adjusted and this right accrued to the manufacturer on the date when they paid the tax on the inputs. The right will continue till the facility is available. A manufacturer who is working under the Modvat Scheme can certainly utilise the credit of the duty paid on the inputs used in or in relation to the manufacture of final product for payment of duty on such final product; but he has to take credit on such inputs within six months from the date of issue of the duty paying documents. After the amendment credit cannot be taken on duty paying documents which are more than 6 months old. We answer the question referred to Larger Bench in the favour of Revenue. Therefore, the view taken in case of Osram Surya Pvt. Ltd.[2002 (5) TMI 49 - SUPREME COURT] is the correct view and the contrary view taken in correct. Therefore, the appeals are being taken up for disposal. The appellants availed the benefit of Modvat credit on documents after six months from the date of their issue. After amendment to Rule 57G of Central Excise Act, the appellants are not entitled to such credit. The appeals are accordingly dismissed. Issues involved: Interpretation of Rule 57G of Central Excise Rules regarding the time limit for taking credit on duty paying documents issued prior to the amendment.1. The appellants were engaged in manufacturing excisable goods under the Modvat Scheme, seeking credit under Rule 57A of the Central Excise Rules for duty paid on goods used in manufacturing final products. Rule 57G allowed credit for inputs received under duty paying documents, with an amendment limiting credit to within six months from the date of issue of such documents.2. The main issue was whether the Revenue could deny credit for documents issued before the amendment but claimed after six months post-amendment, as discussed in the case of National Steel Industries Ltd. v. CCE and Osram Surya Pvt. Ltd. v. Commissioner of Central Excise.3. The Tribunal considered conflicting views from previous cases and referred the matter to a Larger Bench for resolution.4. The appellant argued that the amendment should not be retrospective, as it did not explicitly state so, thus credit should not be denied for documents issued before the amendment date.5. The Revenue contended that the amendment was prospective, not affecting credits taken before the specified date, supporting their stance with the language of the rule.6. The appellant further argued for a reasonable time extension post-amendment for manufacturers to claim credit on older documents, citing a Supreme Court decision.7. Emphasizing that credit crystallizes upon input receipt, not credit claim, the appellant relied on previous Tribunal decisions to support their position.8. The appellants highlighted Section 37 of the Central Excise Act, asserting that no rule allowed the government to revoke Modvat credit once accrued, referencing a Supreme Court case.9. The Revenue countered, stating that credit vested only upon claim in the RG 23A Part-II Account, not upon input receipt, aligning with the language of Rule 57G and Rule 57-I.10. The introduction of the time limit in Rule 57G was noted, specifying the six-month window for taking credit from the issue date of duty paying documents.11. The appellant sought a reasonable period extension for claiming credit on older documents, but the Tribunal found no merit in this plea, citing Supreme Court decisions on statutory limitations.12. Post the Supreme Court decision in Eicher Motors Ltd. v. Union of India, Section 37 was amended to allow rules preventing credit use for duty payment, rendering the appellant's reliance on the previous case ineffective.13. The Larger Bench ruled in favor of the Revenue, aligning with the decision in Osram Surya Pvt. Ltd. v. Commissioner of Central Excise, dismissing the appeals due to credit claims made after the specified time limit.14. No other issues were present, leading to the dismissal of the appeals due to the appellants claiming Modvat credit beyond the stipulated time frame post-amendment.