2002 (9) TMI 238 - AT - Central Excise

Appellate Tribunal allows Modvat Credit claim despite delay due to bank processing (5)

The Appellate Tribunal CEGAT, Kolkata ruled in 2002 that appellants can claim Modvat Credit in RG-23A Part-II register within six months of invoice ... Modvat Credit - time-limit for taking Modvat credit - entry in RG-23A Part-I and Part-II registers - effect of delayed release of invoices on availment of credit - misquotation of statutory rule not a ground for denial of creditModvat Credit - time-limit for taking Modvat credit - entry in RG-23A Part-I and Part-II registers - effect of delayed release of invoices on availment of credit - Whether appellants could avail Modvat credit in RG-23A Part-II after six months from the date of issuance of invoices where inputs were received and entered in RG-23A Part-I within six months but invoices were released by banks after six months. - HELD THAT: - The Tribunal accepted the factual position that inputs were received by the appellants within six months and were duly recorded in RG-23A Part-I within that period; the delay in making entries in Part-II arose solely because invoices were routed through and released late by bankers. The Tribunal relied on precedent holding that the six-month time-limit is directed at the receipt/entry of goods and not at the mechanical completion of Part-II entries; where Part-I entries are timely made, a subsequent delay in completing Part-II entries due to late invoice release does not disentitle the assessee to Modvat credit. Applying that reasoning to the admitted facts, the Court found no justification to deny credit merely because the Part-II entries were completed after six months where receipt and Part-I entry were within the statutory period.Appeal allowed on this count; Modvat credit admissible despite Part-II entries being made after six months because inputs were received and entered in Part-I within six months.Modvat Credit - misquotation of statutory rule not a ground for denial of credit - Whether a small portion of Modvat credit disallowed because it was taken under Rule 57A instead of Rule 57Q should be sustained. - HELD THAT: - A small portion of credit was disallowed on the basis that credit for lubricants was availed under the provisions of Rule 57A instead of Rule 57Q. The Tribunal held that the entitlement to Modvat credit was the substantive question and that incorrect citation or quoting of the rule under which credit was taken does not nullify the assessee's right to credit. Hence, even if the appellants referred to an incorrect rule, the substantive admissibility of the credit-either under Rule 57A or Rule 57Q-remained intact and denial on account of wrong recital of the rule was not warranted.Disallowance on ground of wrong quoting of rule set aside; the credit allowed.Final Conclusion: Impugned order set aside and appeal allowed; Modvat credit admitted to the appellants (including the portion earlier disallowed for incorrect rule citation), with consequential reliefs. The judgment by Appellate Tribunal CEGAT, Kolkata in 2002 (9) TMI 238 states that appellants can take Modvat Credit in RG-23A Part-II register within six months of invoice issuance if goods were received within that period. Delayed credit due to bank processing is acceptable. Rule 57G(5) prohibits credit after six months, but Tribunal allows credit if goods received within time frame. Appeal allowed, Modvat credit of Rs 1203.00 allowed under Rule 57A or 57Q, despite incorrect quoting of rule. Impugned Order set aside, appeal granted to appellants.