Customs, Excise and Gold Tribunal - Tamil Nadu
Brakes India Ltd. vs Collector Of Central Excise on 5 June, 1995
Equivalent citations: 1997(96)ELT434(TRI-CHENNAI)
ORDER
S. Kalyanam, Vice President
1. The above batch of appeals have been referred to the Larger Bench for consideration of an important question of law with reference to applicability of the bar of limitation when a statute does not in terms prescribe a period of limitation in the same. In the above batch of appeals, the department chose to initiate proceedings to recover Modvat credit which according to the department was either wrongly or irregularly in contravention of the provisions of the Rules taken or utilised by the manufacturers concerned and the contention of the assessees in those cases, where proceedings were instituted by the department to recover the irregularly availed or utilised Modvat credit was, that the department was barred by limitation in terms of Rule 57-I of the Central Excise Rules, 1944. Likewise, alternatively the contention of the department has been right through that inasmuch as Rule 57-I as it originally stood prior to amendment on 6-10-1988 had not prescribed any period of limitation, the department would be eligible and entitled in law to initiate proceedings to recover wrong or irregular taking or utilisation of credit by the assessees without being subject to any bar of limitation. It is only in this context having regard to the controversy involved in the interpretation of Rule 57-I as it stood at the relevant time without any specific period of limitation being prescribed thereunder, and also keeping in mind the conflict of views on this issue between some High Courts such as Madras and Gujarat and also keeping in mind the conflict of view between the Benches, a Larger Bench was constituted to resolve the controversy.
2. Therefore, the issue before the Bench is with reference to the applicability of the bar of limitation while interpreting Rule 57-I as it stood prior to amendment on 6-10-1988 without any specific period of limitation having been prescribed thereunder. For purposes of convenience, we are extracting Rule 57-I which is a relevant rule for consideration in the context of the case as under :-
"Recovery of credit wrongly availed of or utilised in an irregular manner:
(1) If the credit of duty paid on inputs has been taken wrongly, the credit so taken may be disallowed by the proper officer and the amount so disallowed shall be adjusted in the credit account or the account-current maintained by the manufacturer or if such adjustments are not possible for any reason, by cash recovery from the manufacturer of the said goods.
Provided that such manufacturer may make such adjustments on his own in the credit account or the account-current maintained by him under intimation to the proper office.
(2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section the manufacturer shall upon a written demand being made by the Assistant Collector of Central Excise pay the duty leviable on such inputs within ten days of the notice of demand."
For better appreciation and also to keep track of the subsequent change in the statute, we are also incorporating Rule 57-I after it was amended :-
"Recovery of credit wrongly availed of or utilised in an irregular manner:
(1) (i) Where credit of duty paid on inputs has been taken on account of an error, omission or mis-construction, on the part of an officer or a manufacturer, or an assessee, the proper officer may, within six months from the date of such credit, serve notice on the manufacturer or the assessee who has taken such credit requiring him to show cause why he should not be disallowed to such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him :
Provided that where such credit has been taken on account of wilful mis-statement, collusion or suppression of facts on the part of a manufacturer or an assessee, the provisions of this clause shall have effect as if for the words 'six months' the word 'five years' were substituted.
(ii) The proper officer, after considering the representation, if any, made by the manufacturer or the assessee on whom notice is served under clause (i), shall determine the amount of such credit to be disallowed (not being in excess of the amount specified in the show cause notice) and thereupon such manufacturer or assessee shall pay the amount equivalent to the credit disallowed, if the credit has been utilised, or shall not utilise the credit thus disallowed.
(2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section, the manufacturer shall upon a written demand being made by the Assistant Collector of Central Excise pay the duty leviable on such inputs within 10 days of the notice of demand."
3. The Division Bench of the Madras High Court in the case of Advani Oerlikon Ltd. v. Assistant Collector of Central Excise reported in 1993 (63) E.L.T. 427 (Mad.) dealing with this issue has observed as under :-
"We are thus of the opinion that notwithstanding the rule, which did not contemplate any notice or any period of limitation for the demand, the rule of limitation, as found in Section 11 A of the Act, has still to be applied to the case of the petitioners. We have come to this conclusion following the rule of strict construction of a taxing statute. It is said in Maxwell on the Interpretation of Statutes - 10th Edition, Page 284, "The tendency of modern decisions, upon the whole, is to narrow down materially the difference between what is called a strict and beneficial construction."
No doubt one has to look merely on what is clearly said in a taxing statute. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing has to be read in, nothing has to be implied, one can only look fairly at the language used. (See Cape Brandy Syndicate v. I.R.C. [(1921) 1 K.B. 64]. Even so the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act. But, as pointed out by a Division Bench of the Calcutta High Court in C.I.T. v. Vegetable Products [(1971) 80 ITR 14] and the judgment of the Supreme Court affirming the said Calcutta decision in C.I.T. v. Vegetable Products Ltd. [(1973) 88 ITR 192] and stated in a Full Bench decision of Patna High Court in the case of jamunadas Mannalal v. Commissioner of Income-tax, Bihar [(1985) 152 ITR 261], we have construed the provisions of the rules following, "when a provision is ambiguous or is capable of two meanings, the construction beneficial to the citizen should be adopted".
When we return to the facts of the case to see how the respondents have proceeded in the case, their answer to the violation of the principles of natural justice has already been referred to above. The only notice given to the petitioners is one falling under Sub-rule (2) of Rule 57-I, as it existed before 6-10-1988, that notice has to come only after the notice, calling upon the petitioners to show cause why they should not pay the amount, as specified in the notice. The notice calling upon the petitioners to show cause has to conform to the requirements of Section 11A of the Act and thus should be within six months or within five years, as the case may be, depending upon the fact, for which periods of limitation of six months and five years are respectively contemplated. Respondents are persons who are expected to know the law and follow strictly the procedure for realisation of taxes. They are duty-bound to ensure that no one escaped the tax liability, dodged revenue and unfairly benefited himself by not paying the taxes. They are required, however, to act with caution when proceeding to implement the laws, which have far reaching consequences. They cannot, assume into themselves a finality of the judgment as to the tax liability of certain persons, without informing them of the grounds on which they have come to think that the person concerned had not paid the tax or had short-paid the tax or he had not been levied to tax or had been short-levied. It is only after knowing what is the representation of the person, who is chargeable to tax, in the situations as above, that they should decide to issue demand notice. Any ex parte decision without affording opportunity of being heard to a tax payer, in the situations of this kind, in our opinion, apart from what is stated in Section 11 A, shall be hit by the principle of audi alteram partem, one of the three well recognised rules of the principles of natural justice."
4. In respect of an identical issue as to whether Section 11A of the Central Excises & Salt Act, 1944 could be read into Rule 57-I of the Central Excise Rules, 1944, the Division Bench of the Gujarat High Court went into the issue in the case of Torrent Laboratories Pvt. Ltd. v. U.O.I. reported in 1991 (55) E.L.T. 25 (Guj.) and the Gujarat High Court after detailed consideration of the case laws relevant to the issue and also the provisions of Section 11A of the Central Excises & Salt Act, 1944 and Rule 57-I of the Central Excise Rules, 1944, gave the following findings :-
"It is next contended that Rule 57-I as it stood prior to amendment should be read in conjunction with Section HA of the Act. It is submitted that if credit is wrongly taken, it would be non-payment of duty or short-payment of duty. Such cases are covered by the provisions of Section HA of the Act. Section 11A of the Act is the only provision in the Act regarding the recovery on duty on account of short-payment and/or under assessment. Hence it is submitted that Rule 57-I which is a subordinate legislation should be read in confirmity with the parent provision in the statute which is contained in Section HA of the Act. In short, it is submitted that the provisions of Section 11A of the Act as regards the period of limitation should be read into the provisions of Rule 57-I as it stood prior to the amendment by necessary implication.
The aforesaid contention cannot be accepted for the following reasons :
(1) Section 11A of the Act provides for recovery of duties in certain cases and it has come into force with effect from November 17, 1980. This provision is contained in the Act while the provisions of Rule 57-I relating to recovery of wrongfully availed of Modvat credit has come into force with effect from March 1,1986. The Government has exercised the power conferred upon it under Section 37 of the Act by which the Government is empowered to make rules to carry into effect the purpose of the Act. Rules 57A to 57P relating to Modvat scheme are framed to streamline the process of levy and collection of excise duty. By no stretch of reasoning it can be said that the rule is enacted for extraneous purpose. It does subserve the purpose of the Act, i.e. the levy and collection of excise duty on goods manufactured or produced in the country. Rule makes a different and specific provisions with regard to Modvat credit wrongfully availed of or wrongfully utilised. Provisions of Section 11A do not provide that the legislature shall not make specific provisions with regard to particular types of credit availed of by the assessee. There is nothing inconsistent in Rule 57-I which cannot be enacted by the legislature when the provisions of Section 11A of the Act is in operation. Section 11A of the Act occupies the general field while Rule 57-I deals with specific field of wrongful availment of Modvat credit. Rule 57-I is enacted by the legislature in exercise of powers conferred upon it under Section 37 of the Act and not under Section 11A of the Act. The provisions of Rule 57-I is to be in conformity with the provisions of Section 37 of the Act. On March 1,1986 when Rule 57-I was enacted and brought on the statute book the legislature was aware about the provisions of Section 11A of the Act being in force. Therefore it has got to be presumed that the legislature has made the provision with a specific purpose. It is cardinal principles of interpretation of statutes that the legislature does not indulge in exercise in futility.
(2) It is over-simplification to say that Rule 57-I as it stood prior to amendment is nothing but provision with regard to recovery of duty as it is in the case of short-payment of duty, short-levy of duty or under-assessment. Section 11A of the Act is a general provision which covers and deals with all types of short-levy, short-payment and under-assessment. On the other hand, the provisions with regard to the Modvat scheme (Rules 57A to 57P) have been introduced in the statute book by notification dated March 1, 1986, provisions with regard to Modvat may be analogous to the provisions of set-off contained in Rule 56A, but it is not set-off by way of proforma credit. There is distinction between the two. The very fact that despite the provisions of Section 11A of the Act and Rule 56A being on the statute book, the legislature thought it fit and proper to make special provisions with regard to the cases of wrongful availment of credit by enacting. Rule 57-I shows that the legislature did not intend to apply the general provisions contained in Section 11A of the Act to the cases of wrongful availment of credit which is specifically provided for in Rule 57-I. (3) There are certain distinguishing and special features of Modvat scheme. If these features are noted, it would be clear that the provisions with regard to Modvat scheme is a special one and the provisions contained in Rule 57-I regarding wrongful availment of Modvat credit is also special. The special and distinguishing features of Modvat scheme of which Rule 57-I is a part, may be noted:
(a) Modvat, unlike the provisions of proforma credit contained in Rule 56A is applicable not only to raw materials, components and end products, but it applies to 'inputs' as defined in the Modvat scheme itself. 'Input' can be an end product and it may not be necessarily raw material or component product of any other product. The term 'input' defined in the scheme itself shows that 'input' may be anything used in addition to or relating to the end product. Thus 'input' may be even packing of the end product. 'Input' may be something other than the raw material or component part of it. In this view of the matter, duty-wise and commodity-wise, scope of Modvat scheme is far wider than that of set-off contained in Rule 56A of the Rules. The type of cases covered by Modvat are required to be specifically dealt with as provided by the legislature, and they are not to be dealt with as per the provisions of Section 11A of the Act and Rule 56A of the Rules.
(b) As far as the procedure of Modvat scheme is concerned, it is also different. While taking Modvat credit the assessee is not required to wait for permission of the Department. He has just to make declaration and obtain acknowledgement of the declaration. After having obtained acknowledgement of the declaration, he can straightaway start taking credit in respect of the 'inputs' utilised by him for the purpose of manufacture of end product.
(c) Basis of Modvat - mutual trust and confidence. While enacting Modvat provision, legislature has reposed a sort of trust or confidence on the assessee. The legislature expects the same type of candid and forthright behaviour on the part of the assessee. Assessee himself is required to keep proper account of the credit availed of and utilised. In case of mistake, even assessee himself can correct the mistake under intimation to the department.
(d) In cases governed by Section 11A of the Act and Rule 56A of the Rules, the assessee as well as the Department may start with suspicion. The assessee may feel that the Department is trying to exact the property of the individual citizen without authority of law and even when it is authorised by law the same is being exacted unlawfully and in unjust manner. The Department may starts with the premise that so long as the assessee can, he will never pay the legitimate excise duty payable to the State. Such suspicion cannot be the basis as far as the Modvat scheme is concerned. Modvat scheme rests on the trust and goodwill of both the sides. It is a relationship of mutual trust. It is not a relationship of mutual distrust.
(e) Thus it is evident that the Modvat scheme and the provisions contained therein are a special provision. The special scheme regarding availing of the Modvat credit provides its own special provision with regard to the steps to be taken in cases of wrongful availment of credit.
Whenever a general provision is in operation and thereafter knowing fully well that the general provision is in operation, the legislature enacts a special provision, it has got to be presumed that the legislature did not intend the general provision to apply to the special cases culled out by it. The general provision made in that sphere has got to yield to the special provision. This is one of the basic principles of interpretation of statutes. In this connection reference may be made to a decision of the Supreme Court in the case of J.K.C.S. & W. Mills v. State of UP reported in AIR 1961 Supreme Court 1170. In Para 9 of the judgment the Supreme Court has held that specific provision prevails over the general provision and the general provision applies only to such cases which are not covered by special provision. The rule applies to both type of cases, that is, while interpreting different provisions in different statutes as well as in the same statute. The Supreme Court has observed as follows :-
"The learned Attorney-General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect."
Similar view is taken by the Supreme Court in the case of State of Gujarat v. Patel Ramjibhai Danabhai reported in (1979) 3 Supreme Court Cases 347. In that case, the legality and validity of provisions of Section 33(6) of the Bombay Sales Tax Act, 1959 [corresponding to Section 14(6) of Bombay Sales Tax Act, 1953] came up for consideration before the Supreme Court. It was contended that no time limit was provided in this specific provision, while for taking actions in other cases, Section 35 provided time limit and therefore the provisions should be held to be ultra vires. The Supreme Court applied the maxim - GENERALIA SPECIALIBUS NON DEROSANT and negatived the contention. The Supreme Court held that the provision of S. 33(6) of the Bombay Sales Tax Act, 1959 was confined to a particular class of tax evaders while Section 35 of the Bombay Sales Tax Act, 1959, was a general provision dealing with escaped assessment or under assessment. Thus whenever the legislature makes general provision and in the same sphere makes a special provision which would be applicable to specific cases, the provision relating to specific cases would be applicable to specific cases and not the provision relating to general cases.
Thus in view of the first principles as regards the interpretation of statutes and in view of the aforesaid two decisions of the Supreme Court, the contention that the provision of Section 11A of the Act as regards the period of limitation should be read into Rule 57-I as it stood prior to the amendment cannot be accepted."
5. The learned single Judge of the Karnataka High Court dealing with an identical issue in the case of Thungabhadra Steel Products Ltd. v. Superintendent of Central Excise reported in 1991 (56) E.L.T. 340 (Kar.) has observed as under :-
"Under the scheme of Modvat credit in Chapter 4AA of the Rules, the assessee gets a rebate on the duty payable on the final products to the extent the duty is paid on inputs. This is in addition to the proforma credit allowed under Rule 56A. Under Rule 56A, the proforma credit of the duty paid on the inputs, material or component parts, is allowed provided the finished excisable goods and the material or component parts are eligible to duty under the same heading or sub-heading of the Schedule to the Central Excises and Salt Act. The additional benefit allowed under the Modvat scheme is that such credit and the duty paid on inputs is allowed, whether the finished product and the inputs availed are under the same heading or not. Thus, under both the schemes, viz., proforma credit and the Modvat credit, the benefit or the rebate the manufacturer gets is the rebate in the duty payable on the manufactured goods under Section 3 of the Central Excise Act.
Therefore, having regard to the scheme of Modvat credit, if a proper officer finds that Modvat credit had been wrongly availed of or utilised in an irregular manner, he takes steps to recover the duty which was legitimately payable by the assessee under the Act in accordance with the procedure prescribed under the relevant rules. The scheme provides for debiting the credit availed of to the PLA account, which is a self removal facility provided under the scheme of the Modvat credit. This credit will have to be reversed in accordance with law resulting in recovery of the duty that becomes payable as a consequence of the reversal. Under Rule 57E, the duty in respect of which credit is allowed, is adjusted in the credit account maintained by the assessee as prescribed under Rule 57G. Under 57G(4), the manufacturer of final product is required to submit monthly return indicating the particular inputs received during the month and the amount of duty taken as credit along with extracts of Parts I and II of Form RG 23A, and, also make available the documents evidencing the payment of duty on the inputs taken, to the proper officer. Therefore, having regard to this scheme, any reversal of the credit availed of by the manufacturer wrongly, results in withdrawal of the allowance of the credit and the proper officer proceeds to recover the amount equivalent to the disallowance in the manner prescribed in Rule 57-I. It, therefore, stands to reason why restriction was placed by the Central Govt. on Rule 57-I, as amended with effect from 6-10-1988. This restriction is the time limit of six months for recovery of credit wrongly availed of, if it is an error on the part of the officer, and time limit of five-years is allowed if such credit has been taken on account of, wilful misstatement, collusion or suppression of facts on the part of the manufacturer or an assessee. This amendment brings about uniformity in the procedure prescribed under the Rules as are applicable to both the schemes under 56A and 57A. The substantive law prescribed in the Central Excise Act for recovery of any duty payable, short levy or erroneous refund is Section 11A of the Act which places restriction of the exercise of power in the manner provided therein.
Therefore, Rule 57-I, as it stood before amendment with effect from 6-10-1988 should receive the same interpretation as it should receive after amendment and should be made applicable to the facts of the present case as well. The earliest decision of the CEGAT on this point was by the Bombay Bench in Collector of Central Excise v. Bharat Containers Pvt. Ltd. [1990 (48) E.L.T. 520 (Tri.)]. The Tribunal held thus :- (para 5).
"When the credit has been taken wrongly or it is in excess of the eligibility, it is a case of erroneous credit, which can be recovered by a demand. Such a demand cannot go beyond the purview of the statutory provisions of Section 11A of the Central Excises & Salt Act, 1944. Even if Rule 57-I is sought to be invoked, it is to be read with the provisions of Section 11 A, which is the statutory provision for recovery of any duty -either short-levy or non-levy or duty taken erroneously as proforma or Modvat credit".
I fully agree with the reasoning of the Tribunal."
6. We note that the Supreme Court in the case of GOI v. Citedal Fine Pharmaceuticals reported in 1989 (42) E.L.T. 515 (S.C.) dealing with Rule 12 of the Medicinal Toilet Preparations (Excise Duties) Rules went into a similar issue with reference to applicability of the bar of limitation when a statute does not in terms prescribe any period of limitation and gave a finding that "while it is true that Rule does not prescribe any period within which recovery of duty is to be made, but that would not by itself render the rule unreasonable or violative of Article 14 of the Constitution of India". The Supreme Court further observed that it was well settled that in the absence of any period of limitation every authority has to exercise the power within a reasonable period. It was further observed that what would be the reasonable period would depend upon the facts of each case and whenever a question regarding the inordinate delay in the issue of demand is raised, it would be open to the assessee to contend that the notice of demand is bad on grounds of delay and it would be for the authority concerned to consider the issue whether in the facts and circumstance of a case notice of demand for recovery of tax or dues was made within a reasonable period. We further note that this ruling of the supreme Court was not considered by the Division Bench of the Madras and Karnataka High Courts whereas it has been specifically considered by the Division Bench of the Gujarat High Court in the case of M/s. Torrent Laboratories Pvt. Ltd. in para 7 of the judgment. Since in our view the principles laid down in the ruling of the Supreme Court would be applicable in the context of Rule 57-I as it stood at the relevant time and would subserve the best interests of the department as well as the assessees and would be in consonance with the Modvat scheme in general and recovery of wrong or irregular credit by the department in particular, we are inclined to hold that a period of six months in normal circumstances and a period of five years wherever there is suppression, wilful misstatement or collusion etc. for availing of Modvat credit in contravention of law would be the reasonable period of limitation. This view of ours is in consonance with Modvat scheme and also the later amendment to Rule 57-I which has been extracted above. We also would like to reiterate that the Karnataka High Court also in the ruling referred to above taking note of the subsequent amendment to Rule 57-I has observed as under :-
"Therefore, Rule 57-I, as it stood before amendment with effect from 6-10-1988 should receive the same interpretation as it should receive after amendment and should be made applicable to the facts of the present case as well. The earliest decision of the CEGAT on this point was by the Bombay Bench in Collector of Central Excise v. Bliarat Containers Pvt. Ltd. [1990 (48) E.L.T. 520 (Tri.)]. The Tribunal held thus :- (para 5) "When the credit has been taken wrongly or it is in excess of the eligibility, it is a case of erroneous credit, which can be recovered by a demand. Such a demand cannot go beyond the purview of the statutory provisions of Section 11A of the Central Excises and Salt Act, 1944. Even if Rule 57-I is sought to be invoked, it is to be read with the provisions of Section 11 A, which is the statutory provision for recovery of any duty - either short levy or non-levy of duty taken erroneously as proforma or Modvat credit"
I fully agree with the reasoning of the Tribunal."
It would also be useful to refer to the observations of the Division Bench of the Gujarat High Court in the case of M/s. Torrent Laboratories Pvt. Ltd. in this context and for purposes of convenience and better appreciation at the risk of repetition, we are extracting hereunder the observations of the Gujarat High Court :-
"There is no dispute with regard to the fact that no period of limitation was provided in the rule. Therefore, the contention based on the absence of provision with regard to the period of limitation be examined. However, this contention is covered by a decision of the Supreme Court in the case of GOl v. Citedal Fine Pharmaceuticals, reported in 1989 (42) E.L.T. 515 (S.C.). In that case Rule 12 of the Medicinal Toilet Preparation (Excise Duties) Rules, 1956, the provisions of which are pari materia with the unamended provisions of Rule 57-I was challenged before the Supreme Court. It was contended that the provisions of Rule 12 was unreasonable and violative of Article 14 of the Constitution of India. The Supreme Court negatived the contention and held that simply because the rule does not prescribe any period for the recovery of duty, the provision cannot be said to be ultra vires the provisions of Article 14 of the Constitution. In absence of any provision with regard to the specific period of limitation, the reasonable period of limitation has got to be read into it. This is how the Supreme Court has upheld the provisions of Rule 12 of the Medicinal Toilet Preparations (Excise Duties) Rules, 1956. The same principle would be applicable to the provisions of Rule 57-I of the Rules as it stood prior to the amendment. Hence, there is no substance in the contention and the same has got to be rejected."
7. Therefore, after hearing the submissions of all the parties and on consideration of all the materials on record, we hold that in respect of Rule 57-I as it stood prior to amendment without any period of limitation having been prescribed thereunder, six months period of limitation or five years period of limitation as the case may be, would be considered a reasonable period of limitation in the light of what has been set out above. We further hold that the period of limitation will start running from the knowledge on the part of the department in regard to irregular taking and utilisation of the Modvat credit by the assessees concerned. Rule 57G(4) of the Central Excise Rules, 1944, provides as under :-
"A manufacturer of the final products shall submit a monthly return to the Superintendent of Central Excise indicating the particulars of the inputs received during the month and the amount of duty taken as credit, along with extracts of Parts I and II of Form RG 23A and shall also make available the documents evidencing the payment of duty on the inputs on demand by the proper officer."
We further note that in terms of Rule 173G(2A), every assessee shall file with the proper officer duplicate copies of the gate passes of like documents issued,
(a) during first ten days of a month, on or before the twelfth day of the same month;
(b) during the next tend days of the month, on or before the twenty-second day of the same month; and
(c) during the remaining days of that month, on or before the fifth day of the following month along with a covering list showing the serial number of such gate passes as well as opening balance, credit, debit and closing balance in his account-current and in his account maintained in Form RG 23A Part II. It is further enjoined by the statute under Rule 173G(3) that within five days after the close of each month every assessee shall, in lieu of the returns prescribed under Rule 54, file win the proper officer in quintuplicate a monthly return in the proper form showing the quantity of excisable goods manufactured or received under bond during the month, the quantity used in the factory for manufacture of another commodity, the quantity removed on payment of duty from the place or premises specified under Rule 9, particulars of gate passes, quantity removed without payment of duty for export and other particulars. Apart from this, the statute also enjoins on the assessee to send original and duplicate copies of the account-current and also of the account in Form RG 23A, as the case may be, maintained by the assessee during the period covered by the return. Therefore, keeping in mind that the statutory obligations are cast on the assessee in filing monthly RT 12 returns with relevant documents with extracts of RG 23A Parts I and II registers with other documents relating to Modvat credit and since RT 12 return is a statutory document for assessment purpose, we hold that the relevant date for reckoning the reasonable period of limitation should commence from the date of filing the RT 12 returns are filed or should have been filed whichever is earlier. We also take note of the fact that there may be certain circumstances where Modvat credit could have been correctly taken by the assessee and also correctly utilised in respect of the end-product, yet reversal of some Modvat credit may be called for by the department on the same, on the ground that some portion of the end-product or the whole were cleared under exemption or at nil rate of duty at a later point of time utilising the duty paid inputs on which the Modvat credit had been availed of. In such a situation, we hold that the period of limitation will start running from the date of the filing of the RT 12 returns relating to the exempted goods.
8. Before parting with this case, we would like to refer to the contentions of Sh. Venkataraman, the learned Counsel, appearing for the appellant M/s. Union Carbide India Ltd. in A. No. E/174/90. The learned Counsel contended that the issue in this case is with reference to the appellant's eligibility to take enhanced credit in terms of Rule 57E read with Notification No. 257/87, dated 8-12-1987. Shri Venkataraman contended that initially in respect of the goods imported and used as an input Modvat was restricted to Rs. 800/- per MT under Notification No. 149/87, dated 20-5-1987 and subsequently, by Notification No. 257/87 cited supra the assessee was permitted to avail the Modvat to the extent of the full duty paid as countervailing duty on the inputs in respect of Rs. 800/-. The appellant in that case was not aware of the subsequent amendment and therefore chose to avail the credit beyond six months. In respect of the portion of the credit, the learned Counsel, contended that inasmuch as Rule 57E does not prescribe any period of limitation for taking Modvat credit, the appellant should be held eligible to avail Modvat without the right being circumscribed or curtailed by the bar of limitation even on the basis of the ratio of the Supreme Court judgment in the case of Citadel Fine Pharmaceuticals. The learned Counsel also placed reliance on the decision of the North Regional Bench in the case of Veekay Gen. Inds. v. Collector of Central Excise reported in 1993 (44) ECR 224 (Tribunal). He also fairly conceded that the South Regional Bench has been consistently taking a contra view in the case of Collector of Central Excise v. Mysore Lac & Paint Works Ltd. reported in 1991 (52) E.L.T. 590 and in any other cases.
9. We are afraid we cannot accede the plea of the learned Counsel for the reasons set out above in this order. We hold that even under Rule 57E where no limitation is prescribed six months will be a reasonable period of limitation in the facts and circumstances of the case which should be reckoned from the date of receipt of the goods on the factory for taking Modvat. In our view, this is in consonance with the ratio of the Supreme Court in the case of M/s. Citadel Fine Pharmaceuticals.
10. We further note that the other appeals also involve issues with reference to eligibility to Modvat on the inputs concerned on merits and since the Larger Bench has dealt with the only issue relating to period of limitation, the other appeals will be separately listed before the Regular Bench for consideration of the issues on merits with reference to the eligibility or otherwise of the inputs concerned for Modvat under law.