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Electronic Library for GST, Customs, Excise, EXIM, FEMA & Allied Laws

2003 (162) E.L.T. 904 (Tri. - Chennai)

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI
Shri S.L. Peeran, Member (J)
BRAKES INDIA LTD.
Versus
COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II
Final Order Nos. 516-517/2003, dated 20-6-2003 in Appeal Nos. E/979 & 784/2001
Cenvat/Modvat - Modvat credit - Time limit for taking credit - Input invoices
were of dates prior to 1-9-1997 and credit taken on 18-1-1999 - Entry in RG 23A, Part-
I made within four months - Modvat rules substantively complied with - Aspect
covered by Rule 57G(2A) of erstwhile Central Excise Rules, 1944 - Commissioner
(Appeals) order granting Modvat credit upheld. [para 7]
Cenvat/Modvat - Modvat credit - Time limit for taking credit - Credit taken in RG
23A - Part-I within six months from the date of input document - Commissioner
(Appeals) finding that credit taken irregularly not correct and not in terms of C.B.E. &
C. Circular No. 275/109/96-CX., dated 26-11-1996 - Commissioner (Appeals) finding
set aside - Rule 57G(2A) of erstwhile Central Excise Rules, 1944. [para 6]
Assessees appeal allowed/Revenue’s appeal rejected
CASE CITED
Commissioner v. Aurobindo Pharma Ltd. — 2001 (127) E.L.T. 786 (Tribunal) — Relied on [Para 5]
DEPARTMENTAL CLARIFICATION CITED
C.B.E. & C. Circular No. 275/109/96-CX, dated 26-11-1996........................................ [Paras 4, 6]
REPRESENTED BY : Shri R. Raghavan, Advocate, for the Appellant.
Shri P. Devaludu, DR, for the Respondent.
[Order (Oral)]. - Both, the party and revenue are aggrieved with the order passed by the
Commissioner (Appeals) in order-in-appeal No. 73-74/2001 (M-II), dated 9-4-2001 and have filed the
above respective appeals.
2. The assessee is engaged in the manufacture of parts of Motor Vehicles. They were availing
modvat credit under Rule 57A/Q. During the course of verification, it was observed that the assessee had
taken Modvat credit of Rs. 18,072/- on 25-3-2000 and Rs. 1,00,362/- on 18-1-99 based on the invoices.
The Commissioner, after due examination, held that the input documents is dated 29-1-98 and the credit
had been taken on 25-3-2000 and hence denied the same in respect of Appeal No. 203/2000 (M-II)
before him on which the assessee has come in appeal.
3. In respect of appeal pending before him in Appeal No. 204/2000 (M-II), he found that the input
invoices were dated prior to 1-9-97 and the credit had been taken on 18-1-99. He found that the aspect
was covered by Rule 57G(2A) as it stood during the period and hence allowed the credit. Revenue is
aggrieved with the same and have come in appeal.
4. In so far as the rejection of modvat credit on the premise that the credit was taken on 25-3-
2000, it is pointed out by the learned Counsel from the records that they had taken the credit in RG 23A,
Part-I on 22-6-98. The same is evidenced from the extract and the same is produced in the paper book.
The Asst. Commissioner has clearly endorsed on the said application seeking to avail duty credit based
on the original invoice as per Notification No. 23/94 (N.T.), dated 28-5-94. The permission for availing
duty credit was filed on 25-6-98 based on the original invoice as the duplicate copy had been lost. The
verification had been done and it was found that the input had been received. This point has been
confirmed by the Commissioner. The only point to be clarified is as to whether the credit had been taken
within six months. On this point, ld. Counsel relies on the Board’s Circular No. 275/109/96-CX., dated 26-
11-96 in which the clarification has been given in Point-5 on this very ground.
5. This point has also been clarified by this Bench in the case of CCE Hyderabad v. Aurobindo
Pharma Ltd., 2001 (127) E.L.T. 786 (Tri-Chennai) as recorded in para-4 which is reproduced herein
below :-
“4. On a careful consideration of the submissions and material on record, we find that -

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The credit has been taken initially on 23-6-1996 and (a) 14-12-1996 and thereafter it was reversed on 31-12-1996
and 18-2-1997 in the other case. Thereafter, they took up the matter with the concerned Custom House and obtained the
relevant documents i.e. Bill of Entry to take the credit which could be obtained by them only on 14-2-1997 and other on 13-3-
1997. We find that the credit only of duty which was originally taken at the time of receipt of the goods was reversed by the
respondents on being objected to by the audit officers and corrective measures were taken by them and this delay in
obtaining copies of the documents i.e. Bill of Entry in this case was contributed by the department also. The credit taken
originally was well within the period of six months from the date of issue of the document. It was only that the amounts of duty
credit taken were promptly reversed and thereafter they are entitled to take the same when the correct document has been
received. We cannot find correction of accounting error or mistake to be taking of the credit if the entry for making of credit
taking is more than six months. We do not find any bar in the Rules providing for such a delay to prohibit availment of Modvat
credit. What prohibits is starting of taking credit after six months of the date of issue of the documents on which the goods said
to have been received in the factory and not the process of taking credit. Taking of credit starts with receipt of goods and if the
receipt of goods in the factory have been effected within six months period, if credit in part one register taken and part two has
not been taken for some reason, these credit entries are not completed within a period of six months and it takes more than
six months, we cannot find any reason to bring any bar in Rules as envisaged in the present appeal.”
6. In view of credit having been taken in RG 23A, Part-I within six months from the date of input
document, it cannot be said that availment was done irregularly. Therefore, the Commissioner’s rejection
of assessee’s plea is not correct and is not in terms of Board’s circular and the citation referred to.
Therefore, the party’s appeal is allowed.
7. In so far as the Revenue’s appeal is concerned, it is seen that Commissioner has examined all
the aspects of the matter including the rules which provided for grant of credit within six months from the
date of invoice. He has noted that there has been substantive compliance of law under Modvat rules and
that it is covered by Rule 57G(2A) as it stood during the period. In this case also, the party has made the
entry in RG 23A, Part-I within four months in terms of facts stated in the show cause notice. In that view of
the matter, there is not error in the Commissioner’s order in granting Modvat credit. Therefore, I do not
see any reason to interfere with the impugned order on this aspect of the matter and hence the
Revenue’s appeal is rejected. Both the appeals are disposed of in the above terms.
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