2005 (8) TMI 662 - AT - Central Excise

Summary

Issues Involved:
1. Whether the accumulated money credit can be used for the clearance of final products after the rescinding of the notification.
2. Distinction between money credit and Modvat credit schemes.
3. Applicability of various case laws and circulars to the present case.

Issue-wise Detailed Analysis:

1. Accumulated Money Credit Utilization:
The primary issue was whether the accumulated money credit of Rs. 17.92 crores, which respondents had accumulated under Notification No. 45/89, could be utilized for the payment of duty on their final products after the scheme was abolished by Notification No. 16/96. The Original Authority denied this utilization, but the Commissioner (Appeals) allowed it, relying on several case laws. The principle enunciated in these case laws, including the Gujarat High Court's decision in *Deepak Vegetable Oil Industries Ltd. vs. UOI* and the Supreme Court's upholding of the same, was that the right to utilize accumulated credit does not cease with the rescinding of the notification. The Tribunal agreed with this principle, noting that the respondents had acquired a right to use the money credit for payment of duty on vanaspati, and this right could not be extinguished by the rescinding of the notification.

2. Distinction Between Money Credit and Modvat Credit Schemes:
The Revenue argued that the money credit scheme differed significantly from the Modvat credit scheme, highlighting differences such as the purpose of credits, the basis of credit allowance, and the conditions for utilization. For instance, Modvat credit is based on actual duty paid on inputs, whereas money credit was an incentive for using minor oils, which were not subject to excise duty. The Tribunal, however, found these distinctions irrelevant to the main issue, which was whether a right conferred by law could be extinguished by rescinding the notification.

3. Applicability of Case Laws and Circulars:
The Revenue cited several case laws and circulars to support their argument that the accumulated credit should lapse. For instance, they referenced the Supreme Court decision in *Tungabhadra Industries Ltd. vs. UOI*, which held that accumulated credit could be utilized subject to the conditions of the notification. The Tribunal noted that this decision supported the respondents' case, as it confirmed that accumulated credit does not lapse with the rescinding of the notification. The Tribunal also found that the circulars cited by the Revenue, such as Circular No. 3/93-CX.8 and Circular No. 11/91-CX.8, were not applicable to the facts of the case, as they dealt with different scenarios like factory closure or export clearances.

Conclusion:
The Tribunal concluded that the right to utilize accumulated money credit, acquired under Notification No. 45/89, could not be extinguished by the rescinding of the notification. The respondents were entitled to use the accumulated credit for payment of duty on vanaspati, subject to the conditions of the original notification. The appeal by the Revenue was rejected, and the decision of the Commissioner (Appeals) was upheld.

Pronouncement:
The judgment was pronounced in open court on 26.8.2005.