By TIOL News Service

MUMBAI, OCT 28, 2014: BLAST from the past -

Amending notification 28/95-CE(NT) dated 29.06.1995 -

57G. Procedure to be observed by the manufacturer .

4. In the said rules, in rule 57G, in sub-rule (2), -

(i) after the first proviso, the following proviso shall be inserted, namely :-

"Provided further that the manufacturer shall not take credit after six months of the date of issue of any of the documents specified in first proviso to this sub-rule :";

Notification 6/1997-CE(N.T.) , Dated: March 1, 1997 -

8. In Chapter V of the said rules, -

(a) for section AA, the following section shall be substituted, namely:-

"AA. CREDIT OF DUTY PAID ON EXCISABLE GOODS USED AS INPUTS

57G. Procedure to be observed by the manufacturer.

"(3) No credit under sub-rule (2), shall be taken by the manufacturer unless the inputs are received in the factory under the cover of any of the following documents, namely:-

(a)  …

(b)  …

(c) Triplicate copy of a bill of entry."

(5) Credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) and where the intermediate products manufactured by the user of inputs specified under rule 57J are received by the manufacturer, after nine months.

The Facts: The appellant imported gear box vide bill of entry dated 10.02.1995. The said consignment along with the bill of entry was received at the appellant's Bhandara factory on 21.03.1996 and the appellant availed credit under RG23A Part II on 28.03.1996.

A SCN was issued demanding the credit taken and proposing to impose penalty for violation of rule 57G(5) of the CER, 1944 which at the material time mentioned "Credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3)… ".

The demand was confirmed along with imposition of penalty of Rs.15 lakhs. The Commissioner (Appeals) upheld the demand but reduced the penalty to Rs.2.5 lakhs. The CESTAT remanded the matter and in de novo nothing changed as far as the appellant was concerned.

The appellant is again before the CESTAT against the o-in-a dated August, 2006.

The Bench, after hearing both sides, adverted to the decision in Osram Surya (P) Ltd. vs. CCE, Indore - 2002-TIOL-64-SC-CXwhere the Apex Court observed that the substantive right had not been taken away by the introduction of the proviso to the Rule but a procedural restriction was introduced and which was permissible in law. Inasmuch as the time limit of six months would be applicable even for the consignment which had arrived before the introduction of the said proviso. Reference was also made to the decision in MRP Ltd. vs. CCE, Mangalore - 2007-TIOL-91-CESTAT-BANG-LB wherein the Larger Bench had taken the view that the time limit of six months would be applicable in the case of goods imported and cleared through bills of entry.

The CESTAT, therefore, observed that in view of the aforesaid decisions the time limit of six months would be applicable from the date of issue of the bill of entry and even in respect of the goods imported prior to the amendment of Rule 57G(5) introducing the time limit.

The judgment in the case of Banner Pharma Caps Pvt. Ltd. vs. CCE, Vapi - 2009-TIOL-628-CESTAT-AHM relied by the appellant was distinguished on facts. The decision in CCE, Chennai-III vs. Ford India Ltd. relied upon was not found worthy by observing that the same did not take into account the Larger Bench decision in MRP Ltd. (supra).

The Bench concluded thus -

…I find that Rule 57G(3) very specifically provides that no credit under sub-rule (3) shall be taken by the manufacturer unless the inputs are received in the factory under the cover of specified documents. Further, sub-rule (5) specifically provides that credit shall not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3). The said sub-rule is very clear and prohibits the manufacturer to take credit after six months from the date of issue of the specified document. In the present case, there is no dispute that the credit has been taken after six months from the date of issue of the specified document and even the goods have been received in the factory on 21.03.1996, which is again more than six months as specified in the said sub-rule.

Holding that there is no merit in the appeal, the demand was upheld. Nonetheless, observing that the nature of the dispute as also the fact that the goods were imported vide bill of entry dated 10.2.1995 before the introduction of the time limit under Rule 57G, the penalty imposed was set aside.

The appeal was disposed of in above terms.

The present: Notification 21/2014-CE(NT) dated 11.07.2014 -

3. In the said rules, in rule 4, -

(a) in sub-rule (1), after the second proviso, the following proviso shall be inserted with effect from first day of September 2014, namely :-

"Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub- rule (1) of rule 9.";

(b) in sub-rule (7),-

(ii) after the fifth proviso, the following proviso shall be inserted with effect from first day of September, 2014, namely :-

"Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of rule 9."

Also see DDT 2462 /24.10.2014. Perhaps the Board has found an answer!

(See 2014-TIOL-2102-CESTAT-MUM)