Prospective Modvat credit time-limit under Rule 57G did not apply to earlier short-credit claim

The six-month time limit for taking Modvat credit under the proviso to Rule 57G(2), inserted by Notification No. 28/95 with effect from 29-6-1995, did not govern an assessee's earlier short-credit claim. The dispute turned on the prospective application of the newly introduced limit, and the Department did not argue that the notification was clarificatory. On the facts, the earlier claim remained outside the new restriction, so the Department's challenge failed.

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Issues: Whether the six-month time limit for taking Modvat credit applied to short credit taken earlier by the assessee.

Analysis: The dispute turned on the applicability of the time-limit introduced with effect from 29-6-1995 by the proviso to sub-rule (2) of Rule 57G, inserted by Notification No. 28/95 dated 29-6-1995. The Department did not contend that the notification was clarificatory. On the facts, the question was not whether Rule 57G was mandatory in the abstract, but whether the newly introduced time-limit governed the assessee's earlier short credit claim.

Conclusion: The time-limit did not govern the assessee's claim for the period in question, and the Department's appeal failed.

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