ORDER
V.P. Gulati, Member (T)
1. This appeal is against the order of the CCE (Appeals), Madras. Under the impugned order the appellants have been denied the benefit of Modvat credit in respect of 539.034 MT of bead wire purchased by them from open market between 1-3-1986 to 15-4-1987, They did not take any credit in respect of the same until 20-9-1989 when they made single consolidated credit entry for Rs 1,96,748.41 in the RG 23A Part II and the Modvat credit taken by them was deemed Modvat credit based on the orders of the Government of India bearing F. No. 342/1/88/-TRU, dated 1-3-1989 under which purchase made in respect of goods falling under Heading 72.13 were eligible for deemed credit facility without production of gate pass etc. as prescribed under Rule 57G of the Central Excise Rules, 1944 evidencing payment of duty. The deemed credit taken by them was after withdrawal of deemed credit facility on 1-3-1986 by another order of the Government of India. The lower appellate authority has held that since deemed Modvat credit was taken after issue of order withdrawing the facility, they would not be eligible for this credit subsequent to 1-3-1989.
2. Shri Ignatius, Corporate Manager appearing for the appellants pleaded that after receipt of the goods by them between 1-3-1986 and 15-4-1987 since the goods were not covered by any gate pass they chose to await the receipt of the gate pass and did not take Modvat credit in respect of these inputs. He pleaded that however, they made entries about the receipt of the inputs in Part I of the RG 23A Register without making any corresponding entry about the Modvat credit available in respect of the same. He pleaded that they could have taken the Modvat credit immediately on the receipt of the goods in terms of the Government of India order dated 7-4-1986. After awaiting for a long time for the gate passes they took Modvat credit on 20-8-1989 after a period of about two years, when the goods, he pleaded, were still lying in stock and were utilised subsequent to the taking of the deemed credit. He pleaded that the appellants’ right to take Modvat credit accrued immediately on the receipt of the goods and the same could not be taken away just because the appellants chose to take Modvat credit at a later date. He pleaded that the lower appellate authority was in error in having denied the benefit of Modvat credit for the reasons that the appellants will be governed by the later order of the Government of India dated 1-3-1989 under which deemed credit facility was withdrawn. He pleaded that there was nothing in law to prevent the assessee from taking Modvat credit after the receipt of the goods on account of procedural requirements under the Modvat Scheme as incorporated in the rules are satisfied. He in this connection cited the judgment of the Tribunal in the case of Amal Rasayan Ltd. v. CCE reported in 1993 (68) E.L.T. 446 and also in the case of CCE v. Premier Cables Co. Ltd. reported in 1991 (56) E.L.T. 853. He placed reliance in the case Amal Rasayan Ltd. Para 4 to 8 of the said judgment are reproduced below for convenience of reference :
4. Shri Willingdon Christian, the Ld. Adv. for the Respondents however, submitted that there is no issue of law arising out of the order of this Bench and that the defect has always been treated as rectifiable.
5. Considering the submissions made, the only issue that is sought to be referred to the High Court is whether in case of immediate non-compliance with the requirement of Rule 57G(2) of the Rules can it be rectified at a later stage, by getting appropriate endorsement on the duty paying documents. In short the question is whether the valid documents should necessarily accompany the inputs when received or whether the documents could follow the inputs and further whether defective documents could be rectified at a subsequent stage.
6. Going by the wording of Subrule (2) of Rule 57G, there is nothing to indicate that the documents should necessarily accompany the inputs. What it provides is that the inputs received have to be under the cover of the duty paying documents specified in the said rule. Going by the wording of Subrule (2) of Rule 57G assumed inclusion of the words “should accompany the inputs when received” does not appear to be ex facie justified. Significantly the CBEC has vide its letter No. D-21/4/87-TRU, dated 15-4-1987 permitted making of suitable entry in RG 23A Part I even before the documents are received but has specified that Modvat credit could be allowed, only after receipt of the duty paying documents. This indicates that even the Board has envisaged receipt of documents at a later stage.
7. Production of document is a procedural thing required to substantiate the statutory entitlement for availment of Modvat credit and when such procedural things are provided for, no hard and fast rules can be held and technicalities could not be brought into play to deny the substantive right given. This is what has been held by this Bench in its impugned order. The main question to be looked into is whether the inputs covered by the G.P. is have been actually received and utilised in the manufacture of the specified final products.
8. With the legal position being clear, the probable doubt raised by the applicant cannot be sustained and when the other aspects indicate contrary, the alleged issue of law could not be considered to be arising out of the order. References are meant to be made only when some alternate interpretation is probable and here no such probable alternate interpretation seems to be existing. Therefore, there does not appear to be any need to refer the question to the High Court. The prayer is therefore rejected.
Para 4 of the judgment in the case of Premier Cables is also reproduced below for convenience of reference:
4. We have considered the submissions made by the learned SDR and perused the grounds of appeal. We observe that the procedure for taking Modvat credit has been set out in Rule 57G of the Central Excise Rules, 1944. The requirement is that the assessees are required to file declaration in respect of final products manufactured in the factory and the inputs intended to be used in each of the said final products and thereafter take the credit in respect of the duty paid on the inputs. There is no provision specifying any time limit for taking the Modvat credit in the Modvat Rules on receipt of the goods inside the factory. The plea of the Revenue is that in case the credit is not taken immediately on receipt of the goods inside the factory, this would create a lot of difficulty for the authorities as they will not be able to verify correctly the nature of the goods received and the quantum of Modvat credit being taken by the assessees as various consignments received from time to time will get mixed up. We do not agree that any difficulty will be faced by the Department for verification purposes if the assessee takes the Modvat credit at a later date after their receipt in the factory as the goods received would be covered by proper gate passes and necessary accounts as prescribed under Central Excise Rules and also maintained by the assessees would be available and it should not be difficult for the authorities to correlate the goods with the gate passes. In any case if the assessees fail to correlate the credit taken with the Gate passes under which the goods which entered the factory, the authorities are free to take action under Rule 57-I of the Central Excise Rules for recovery of the credit wrongly taken. We do not see as to how the interests of the Revenue are prejudiced if the assessees choose to take the credit after a lapse of time after the date of receipt of the goods inside the factory. It is in fact the assessees who will be foregoing the benefit of the credit in case they choose to take the credit after a lapse of time as they will be deprived of the benefit of the Modvat credit due till they take the credit. In view of the above in the absence of any specific provision in the Central Excise Rules in regard to time limit for taking Modvat credit, we hold that the plea of the Revenue is not maintainable in law. We, therefore, uphold the order of the learned lower appellate authority and dismiss the appeal.
3. The learned DR for the department pleaded that while no time limit has been prescribed for taking Modvat credit under Rule 57A read with Rule 57G a manufacturer functioning under the Modvat Scheme is required to take Modvat credit immediately on receipt of the goods in their factory. In any case credit will be required to be taken within a reasonable time which has been held by the Tribunal to be six months. He pleaded that in the present case, this credit was taken after six months from the date on which the goods were received in the appellants factory. He, therefore pleaded that for that reason, the appellants could not be eligible for taking Modvat credit.
4. We have considered the pleas made by both the sides. We observe that the admitted position in this case is that the appellants when they received goods in their factory in respect [of] which input credit was available during the period 1-3-1986 to 15-4-1987 they chose not to take Modvat credit and the reason given was that the goods were not accompanied by gate pass as required under Rule 57G for Modvat purposes and they awaited receipt of gate pass which finally did not come. It was therefore on a later point of time on 20-9-1989 they took deemed Modvat credit which was available in terms of the Government of India order dated 7-4-1986 under which this facility was allowed, after this facility had been withdrawn by another order of the Government of India dated 1-3-1989. The CCE (Appeals) has held that since the credit was taken after the facility was withdrawn the benefit would not be available to the appellants. We observe that the appellants’ eligibility to take Modvat credit is with reference to the date on which the inputs have been received in the factory. The goods were not accompanied by necessary gate pass under Rule 57G and therefore, they did not have the evidence of duty having been paid in respect of these inputs as required under Rule 57G for taking Modvat credit but in view of the Government of India order dated 7-4-1986 under which the facility was available, they could have taken this credit on that day in terms of the said order. They however chose not to avail of that credit while the goods remained unused with them and they took the credit on 20-9-1989. Thus instead of taking the credit at the time when they received the goods, they took the credit after a period of over two years i.e. on 20-9-1989. We have held in a number of cases that even if Modvat credit is not taken immediately on receipt of the goods the same could be taken on a subsequent date. We have also taken note of the fact that in our earlier decision that inasmuch as no time limit has been prescribed under the rules for taking Modvat credit, a reasonable time limit of 6 months can be read into the rules, taking into consideration the scheme of the Act under which limit for refund and demand has been fixed as 6 months. In the present case, we find that the appellants are entitled to take Modvat credit after the receipt of the goods. They were required to do this within a reasonable period which we have held as six months. This reasonable period we have held to be read into the rules after taking note of the decision of the Hon’ble Supreme Court in the case of Citadel Fine Pharmaceuticals Ltd. reported in 1989 (42) E.L.T. 515 wherein the Hon’ble Supreme Court have held that where no time limit has been prescribed for a particular function, a reasonable time limit should be read into the rules. In view of above, we hold that inasmuch as the Modvat credit in the present case has been taken beyond the period of six months, the appellants’ claim is barred by limitation. In this view of the matter, we dismiss the appeal.