Modvat credit delay and absence of a statutory time limit raised a referable question of law.

Delay in taking Modvat credit on HDPE woven bags used as packing material, even where credit was claimed several months after receipt of inputs, was treated as raising a question of law because the statute did not express a time limit for availing the credit and the issue turned on whether the delay was reasonable on the facts. The authority held that this question was fit for reference under Section 35G of the Central Excise Act, 1944, and the reference application was allowed only to that limited extent by sending the formulated question of law to the High Court.

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Issues: Whether the Tribunal's allowance of Modvat credit after a delay of 33 to 69 months from receipt of inputs gave rise to a question of law warranting reference, and whether the reference application should be allowed to that limited extent.

Analysis: The Tribunal had allowed Modvat credit on HDPE woven bags used as packing material, but the Department challenged the delay in taking credit in August 1993 for inputs received during 1987 to 1990. The central question was whether, in the absence of an express statutory time limit for taking Modvat credit, the delay could still be treated as reasonable on the facts. The authority found that this issue did raise a question of law in the circumstances of the case. Accordingly, the matter was fit for reference under Section 35G of the Central Excise Act, 1944.

Conclusion: The reference application was allowed to the limited extent of referring the formulated question of law to the High Court.

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