Per Shri G.R. Sharma :

The Collector has filed the captioned two appeals on the ground that the Collector (Appeals) has not correctly interpreted the provisions of Rule 57I to hold that the date of taking modvat credit is the material date for counting the period of six months for issue of show cause notice.

2. The facts of the case are that the respondents are engaged in the manufacture of copper wire and aluminium wire etc. They were availing the benefit of modvat credit under Rule 57A after filing declaration under Rule 57G. The respondents received a consignment of electrolytic copper wire from the importer. The bill of entry was in the name of M/s. Metal Linkers and the importer endorsed this bill of entry in the name of the respondents. The department alleged that the modvat credit cannot be taken on the strength of the endorsed bill of entry. The lower authorities have decided the two issues one was about admissibility of modvat credit on the strength of endorsed bill of entry and the second was whether the demand was hit by limitation in as much the modvat credit on the endorsed bill of entry was taken on 25.1.92 whereas a show cause notice was issued in one case on 28.7.92 and in the other case 31.7.92. In the appeals before me I find that the department has contested only on the issue of limitation and has not contested the issue of taking modvat credit on the strength of endorsed bill of entry. However the Collector (Appeals) had also held that the modvat credit on the endorsed bill of entry cannot be taken and against this the respondents has filed Cross objections.

3. Shri V.R. Sethi, learned JDR appearing for the appellant Commissioner submits that on limitation aspect the words used in Rule 57I(1) say within six months from the date of such credit and not of taking of such credit therefore reasonable interpretation would be that the notice should be raised within six months from the date of taking of such credit and where the credit has been utilised within six months of such utilisation. It was also argued by him that the department would not be aware of the date of utilisation of such credit therefore reasonable interpretation would be to count six months period for issuing show cause notice from the date of RT 12 returns are filed in the case. He submits that if this interpretation is accepted both show cause notices are within time in as much RT 12 returns for the month of January, 1992 would have been submitted by 5.2.92.

4. On the question of Cross Objections filed by the respondents, learned JDR reiterates the findings of the lower authorities.

5. Shri Naveen Mullick, learned Advocate appearing for the respondents submits that it is the date of taking modvat credit which is the material date during the relevant period for counting the period of six months for the purpose of limitation. He submits that Rule 57I of the Central Excise Rules, 1944 stipulates that it is the date of taking credit and not the date of utilising the credit which is the material date for the purpose of counting the period of six months or 5 years as the case may be. He submits that in the instant case there is no mis-statement, suppression etc. as alleged nor can it be alleged therefore the demand can be raised only within a period of six months. The learned Counsel submits that the modvat was taken on 25.1.92 and show cause notices have been issued first on 28.7.92 and the second on 31.7.92 and therefore both show cause notices are beyond the period of six months. He submits that the demand is time barred and therefore prays that the two appeals may be rejected.

6. On the question of acceptance of endorsed bill of entry for taking modvat credit, learned Counsel submits that there are a number of judgments of this Tribunal on the issue. In support of his contention he cites and relies upon the judgment of this Tribunal in the case of Sardar Aluminium Factory (1996 (13) RLT 907) and in the case of Filament India Limited (1996 (84) EL