2015 (1) TMI 581 - HC - Central Excise

Utilization of accumulated money credit lying in its RG 23B, Section 38A-Effect of amendments, etc., of rules, notifications or orders, Part-II by representatives - The Central Excise authorities in case of vanaspati manufacturers including the petitioner-company disallowed use of accumulated money credit for discharging duty liabilities on vegetable/vanaspati products on the ground that the notifications allowing money credit stood rescinded with effect from 25-8-1989. - Held that - vested right has accrued in favour of the manufacturers and that the money credit was a monetary right earned by the manufacturers on purchasing and utilizing unconventional/minor oils and for that the manufacturers had changed the manufacturing process and plants hoping to get money credit, and therefore, the aforesaid right cannot be taken away due to rescinding of the notification. - manufacturers were entitled to utilize the accumulated money credit in terms of the notification and the Money Credit Scheme. Further, the learned Single Judge rejected the claim of the manufacturers to get the accumulated money credit in cash. It is reported that against the said decision both the Revenue as well as the manufacturers had approached the Supreme Court and the Supreme Court dismissed both the Special Leave Petitions 2005 (3) TMI 746 - SUPREME COURT . Therefore, the view taken by the Calcutta High Court 2004 (6) TMI 46 - HIGH COURT AT CALCUTTA that the manufacturers were entitled to utilize the accumulated money credit has been upheld by the Supreme Court. In view of the above, the action on the parts of the respondents in restraining the petitioners from utilizing the accumulated money credit lying in RG-23B as on 21-7-1996 cannot be sustained and consequently any further order trying to recover the same also deserves to be quashed and set aside. - Respective petitioners are entitled to utilize the accumulated money credit lying in their RG-23B register, accumulated as on 21-7-1996 - Decided in favour of assessee.

Issues Involved:
1. Utilization of accumulated money credit by the petitioner-company.
2. Validity of the rescission of notifications allowing money credit.
3. Entitlement of the petitioner to utilize accumulated money credit post-rescission.
4. Applicability of previous judicial decisions on the current case.
5. Legality of the Order-in-Original demanding Central Excise Duty.

Detailed Analysis:

1. Utilization of Accumulated Money Credit:
The petitioner-company sought directions to utilize the money credit earned from using unconventional minor oils, which was accumulated in their RG 23B register as of 22-7-1996. The petitioner argued that the money credit was a vested right earned through compliance with the Central Government's notifications, specifically Notification No. 27/87 and Notification No. 192/87, which allowed money credit for using unconventional oils in manufacturing vanaspati and soap. The petitioner contended that this right could not be rescinded by subsequent notifications.

2. Validity of the Rescission of Notifications:
The Central Government rescinded the notifications allowing money credit through a notification dated 25-8-1989. The Central Excise authorities then disallowed the use of accumulated money credit for discharging duty liabilities on vegetable/vanaspati products. This action was challenged, and the court previously held that the rescission could not take away the vested right to utilize the accumulated money credit. The Supreme Court upheld this decision by dismissing the Revenue's Special Leave Petitions.

3. Entitlement to Utilize Accumulated Money Credit Post-Rescission:
Despite the rescission of the money credit scheme, the petitioner argued that they were entitled to utilize the accumulated money credit based on previous judicial decisions. The Calcutta High Court in "Rasoi Limited v. Union of India" held that manufacturers were entitled to utilize the accumulated money credit, even if the scheme was rescinded. This decision was confirmed by the Supreme Court, which dismissed the SLP against it. The petitioner maintained that the vested right to utilize the accumulated money credit could not be nullified by the rescission of the notifications.

4. Applicability of Previous Judicial Decisions:
The petitioner relied on the decision of the Calcutta High Court, which dealt with a similar issue and held that the right to utilize accumulated money credit could not be taken away. The court observed that Section 38A of the Central Excise Act, 1944, protected such accrued rights from being affected by the rescission of notifications. The Gujarat High Court agreed with this precedent, reinforcing the petitioner's entitlement to utilize the accumulated money credit.

5. Legality of the Order-in-Original Demanding Central Excise Duty:
The petitioner in Special Civil Application No. 16743 of 2004 also sought to quash Order-in-Original No. 01 & 02/Commr/2005, which demanded Central Excise Duty on the grounds that the petitioner wrongly availed the money credit. The court, considering the previous judgments, held that the petitioner was entitled to utilize the accumulated money credit and thus quashed the Order-in-Original.

Conclusion:
The court concluded that the petitioners were entitled to utilize the accumulated money credit lying in their RG-23B register as of 21-7-1996. The court quashed the Order-in-Original demanding Central Excise Duty and ruled that the petitioners' vested right to utilize the accumulated money credit could not be taken away by rescinding the notifications. The court made the rule absolute to the extent of allowing the utilization of the accumulated money credit and set aside any orders trying to recover the same. There was no order as to costs.

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