ORDER
G.N. Srinivasan, Member (J)
1. These two appeals viz. E/652/92 and E/855/92 have been filed by the assessee as well as the department against the decision of the Collector of Central Excise (Appeals) Ahmedabad, made in Order-in-Appeal No. KVV/407/92-BRD whereunder he confirmed the order of the Assistant Collector who by his order dated 10-2-1992 disallowed Modvat credit for the inputs which were lying in balance of the assessee or contained in the final products and cleared at Nil rate of duty after the Exemption notification was issued on 25-5-1991. He confirmed the order made by the Assistant Collector, Valsad who confirmed the order made by the Assistant Collector, Valsad who confirmed the demand of duty of Rs. 5,57,775.31.
2. The assessee in these cases are manufacturing P or P foods classifiable under Sub-heading 2001.10. He was availing Modvat credit. By a Notification No. 19/91, dated 25-7-1991 P or P Foods were exempted from levy of excise duty. The question is what happens to the Modvat credit availed of by the assessees. Show Cause Notice dated 12-12-1991 was issued for the period from July 91 to November 1991 for recovery of the Modvat credit wrongly availed. A.C. confirmed the demand and in appeal Collector (Appeals) held that since the Show Cause Notice was issued on 12-12-1991 the credit of duty can be claimed for the period of six months from the date of such credits. Hence the appeals by the department as well as the assessee.
3. It has been brought to my notice by both parties that by the judgment of the Allahabad High Court in the case of Super Cassettes India Ltd. v. C.C.E. -1997 (94) E.L.T. 302 it held that Modvat credit once availed is not irrevocable. In fact in the case of Super Cassettes Industries Ltd. (supra) where the Allahabad High Court held that there is no warrant in the view that Modvat credit once availed by making the necessary entries is irrevocable. This would amount to unjust enrichment as it cannot be conceived of in the rules on the subject. Since that the Allahabad High Court has held in that way, I would follow it.
4. However, the point at issue in this case is exemption notification exempting from the levy of tax was issued on 25-7-1991, then in respect of final products from that date no Modvat credit could be taken. In terms of Modvat credit in my view, it has been regulated in terms of Rule 57-I as it then stood. It states inter alia that the proper officer may within six months from the date of such credit shall serve the notice on the manufacturer. Here the notice has been issued on 12-12-1991 claiming for the disputed period from July, 1991 to November, 1991. The Collector has held that it is barred by limitation as the credit of duty could be claimed that only for the period of six months prior to 12-12-1991. In effect he has reckoned the time from the date of Show Cause Notice. In my view, it is wrong approach. As stated in my earlier portion of this order we have to consider a recovery of Modvat credit wrongly done in terms of words used in Rule 57-I. The actual words used are within six months from the date of such credit. The finding given by the Collector (Appeals) in my view is wrong. The entire period and the quantity is to be worked out in terms of this provision. The Show Cause Notice provides on the basis that the reversal of Modvat credit of duty paid inputs has to be made in terms of the products lying in stock on 24-7-1991. In my view that type of claim is wrong because from the actual words used in Rule 57-I it should be reckoned from six months from the date of such credits.
5. One point to be noted would be the effect of the Ahmedabad High Court. No doubt the ld. [single] Judge of the Allahabad High Court in the above case has referred in the earlier portion of the judgment has stated that there is unjust enrichment. But even then can the department claim in the same beyond the period of limitation? All authorities have to act within the four corners of law and in the Allahabad High Court judgment the limitation was never discussed. I therefore, hold that the Modvat credit can be reversed provided this claim by the Department within six months from the date of taking of such credit. I would therefore hold that while the Modvat credit availed by the assessee was wrong after the notification dated 25th July, 1991 yet, the Government cannot claim it because Show Cause Notice was not issued strictly in terms of Rule 57-I as it then stood. Appeal of the assessee is allowed. Appeal of the department is dismissed.