2000 (5) TMI 1079 - SC - Central Excise

Issues Involved:
1. Entitlement to utilize accumulated credit under the Money Credit Scheme as per Rule 57K of the Central Excise Rules, 1944.
2. Simultaneous utilization of credits accumulated under Notification No. 27/87 and Notification dated 11th October 1989.
3. Interpretation of the conditions stipulated in the notifications regarding the utilization of accumulated credits.
4. Applicability of judicial precedents from Gujarat High Court and Andhra Pradesh High Court.

Detailed Analysis:

1. Entitlement to utilize accumulated credit under the Money Credit Scheme as per Rule 57K of the Central Excise Rules, 1944:
The appellant, a manufacturer of hydrogenated oil, filed a Reference before the Assistant Collector, Central Excise, Kurnool, claiming entitlement to utilize the accumulated credit under the Money Credit Scheme as per Rule 57K of the Central Excise Rules, 1944. The Assistant Collector held that the appellant could appropriate the credit available on the date of rescission of Notification No. 27/87 (rescinded on 25th August 1989) and the credit accumulated under Notification dated 11th October 1989, but not simultaneously. The appellant's writ petition in the Andhra Pradesh High Court was dismissed, following an earlier judgment in Writ Petition No. 11311 of 1991, which concluded that simultaneous utilization of credits under both notifications was not permissible.

2. Simultaneous utilization of credits accumulated under Notification No. 27/87 and Notification dated 11th October 1989:
The core issue was whether the appellant could utilize accumulated credits under both notifications simultaneously for payment of excise duty. The Supreme Court examined the notifications issued under Rule 57K, which allowed credit for certain raw materials used in manufacturing excisable goods. The 1987 notification and the subsequent 1989 notification both stipulated that the credit utilized for payment of duty on any individual clearance should not exceed Rs. 1000 per tonne of vegetable products.

3. Interpretation of the conditions stipulated in the notifications regarding the utilization of accumulated credits:
The Court emphasized that the notifications issued under Rule 57K played a crucial role in determining the accumulation and utilization of credits. Both notifications contained a condition that the amount of credit utilized for payment of duty on any individual clearance should not exceed Rs. 1000 per tonne. The Court held that while credits accumulated under a rescinded notification could be utilized, they must adhere to the conditions specified in the notification, including the Rs. 1000 per tonne limit.

4. Applicability of judicial precedents from Gujarat High Court and Andhra Pradesh High Court:
The appellant relied on the Gujarat High Court's decision in Dipak Vegetable Oil Industries Ltd. v. Union of India and the Andhra Pradesh High Court's decision in Agarwal Industries Ltd. v. Union of India, which held that accumulated credits could be utilized even after rescission of the notification. However, the Supreme Court clarified that these decisions did not address the simultaneous utilization of credits under different notifications. The Karnataka High Court's decision in Union of India v. Modern Mills Ltd., which approved the Gujarat and Andhra Pradesh High Court decisions, was also considered. The Karnataka High Court held that while accumulated credits could be utilized, they must adhere to the conditions of the notification, and simultaneous utilization of credits under different notifications was not permissible.

Conclusion:
The Supreme Court concluded that the appellant could not utilize accumulated credits under both notifications simultaneously for payment of excise duty. The conditions stipulated in the notifications, including the Rs. 1000 per tonne limit, must be adhered to. The appeal was dismissed, with no order as to costs.

← Previous Next →