Tribunal Upholds Modvat Credit Timing Rule: Goods Receipt Key

COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Versus AUROBINDO PHARMA LTD.

COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Versus AUROBINDO PHARMA LTD. - 2001 (127) E.L.T. 786 (Tri. - Chennai) Issues involved: Appeal by Revenue challenging Modvat credit taken on ineligible documents beyond six months u/s Rule 57G.

Summary:
The Revenue appealed against Modvat credit taken by the assessee on documents issued beyond the permissible six-month period as per Rule 57G. The Revenue argued that the credit was taken on ineligible documents and was reversed only after a significant delay in obtaining the eligible Bill of Entry copies. The respondents contended that they had promptly reversed the credit upon audit objection and later obtained the relevant documents within the permissible period. They argued that any delay was due to factors beyond their control and that the credit was taken within the stipulated timeframe from the date of goods receipt. The Tribunal noted that the original credit entries were within the six-month period and were reversed promptly upon objection. The delay in obtaining the correct documents was also partly attributed to the department. The Tribunal found no legal bar in the Rules preventing the availment of Modvat credit due to delays in completing credit entries, as long as goods receipt occurred within the stipulated timeframe. Consequently, the Tribunal upheld the Commissioner's order and dismissed the Revenue's appeal.

This judgment clarifies that the timing of taking credit under Modvat rules is linked to the receipt of goods within the prescribed period, rather than the completion of credit entries. The Tribunal emphasized the importance of prompt reversal of incorrect credits and allowed the credit when the correct documents were obtained within the permissible timeframe.