1998 (3) TMI 307

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.... 2. We have heard Shri A.N. Haksar, ld. Sr. Counsel with Shri Daya Sagar, ld. Consultant appearing for the appellants and Shri D.K. Nayyar, ld. JDR, who appeared for the respondent Collector. 3. Appellants were issued a two SCNs by the Department on 8-9-1994 and 18-10-1994 asking them to show cause why Modvat credit taken by them on HDPE bags/sacks should not be dis-allowed on the ground that the said items were ineligible inputs. In the initial adjudication proceedings the Assistant Collector by his order-in-original held that HDPE bags/sacks were not admissible inputs and, therefore, no credit on the said items was permissible but since the appellants had already reversed the credit taken by them on HDPE bags/sacks no furt....

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....pport of his contention. He submitted that the Apex Court had held that in the absence of any period of limitation prescribed by the statute, the authority empowered to exercise any statutory power has to exercise the said power within a reasonable period and what would be the reasonable period would depend upon the facts of each case and whenever a question regarding inordinate delay in issuing, a demand notice is raised, it was open to an assessee to contend that the demand was bad in law on the ground of delay. He submitted that a period of six months was recognised as a reasonable period and adopting the same yard stick to the facts of the present case, taking of credit well beyond a period of six months after receipt of the inputs woul....

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....he said decision we hold that HDPE bags used as packaging in the manufacture of cement are eligible for Modvat credit. 8. As regards the time lag in taking credit, the Department's case is that taking of credit beyond a period of six months from the date of receipt of inputs is inadmissible. We find that this question has also now been settled by various decisions of the Tribunal. In CCE v.Tamil Nadu Petro Products Ltd. - 1996 (84) E.L.T. 263 (Tribunal) it was held that Modvat credit taken within a period of six months of receipt of the goods would be permissible. However, in MRF v. CCE, 1996 (88) E.L.T. 222 (Tribunal), availing of credit after a period of more than two years after receipt of the inputs was held to be time-barred. I....