Modvat credit time limit was held prospective only, so credit taken before the amendment could not be denied.

The six-month restriction for taking Modvat credit introduced by Notification No. 28/95-C.E. (N.T.) was held not to apply retrospectively to credit already taken before the amendment came into force. The analysis followed earlier decisions treating the time limit in Rule 57G(2) of the Central Excise Rules, 1944 as prospective only, and noted that the limitation principle in Section 11A of the Central Excise Act, 1944 could not be imported into the Modvat rules to deny pre-existing credit. The operative effect was that denial of Modvat credit on the basis of the later notification was unsustainable.

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Issues: Whether the six-month time limit for taking Modvat credit introduced by Notification No. 28/95-C.E. (N.T.) could be applied to credit already taken before the notification came into force.

Analysis: The credit was taken before the introduction of the six-month restriction in Rule 57G(2) of the Central Excise Rules, 1944. The earlier decisions cited were applied to hold that the amendment introducing the time limit was not retrospective. The reliance placed on the principle that limitation under Section 11A of the Central Excise Act, 1944 cannot be imported into the Modvat Rules also supported the view that the credit could not be denied on the basis of the later notification.

Conclusion: The six-month restriction did not apply retrospectively and the denial of Modvat credit was unsustainable.

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