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2016 (4) TMI 449 - HC - Central ExciseDemand of Modvat credit - Wrongly availed - Manufacturer of two wheeler scooters - Duty paid on High Speed Diesel oil (HSD) used both for generating electricity and as fuel - Held that - the order dated 15.9.2003 records the considered stand of the Department in the matter. In other words the statement made by the Department before the Supreme Court that refund has already been given to the Petitioner holds good and reflects the position that the Department has accepted the orders of the Dy CE and CCE (A) which were affirmed by the order dated 25.2.2003 of the CEGAT. By the last mentioned order the CEGAT re-affirmed the earlier orders to the effect that an aggregate amount of 9, 31, 904/- being the MODVAT credit allowed to the Petitioner for the period prior to 1st March 1998 by the Dy CE by the order dated 30.7.1999 cannot be recovered by the Department. Consequently the Department cannot at this stage seek to enforce any demand viz-a-viz the MODVAT credit availed on HSD by the Petitioner prior to 1.3.1998. Therefore the Respondent is restrained from seeking to recover from the Petitioner the MODVAT credit on HSD availed by it for the period prior to 1st March 1998. The impugned demand notices to that effect are set aside. Constitutional validity of Section 112 of the Finance Act 2000 as received the assent of the President - Denial of credit of duty paid on HSD at any time during the period commencing on and from the 16th day of March 1995 and ending with the day the Finance Act 2000 - Held that - the above directions have been issued in the peculiar facts of the present case and will not constitute a precedent as regards the constitutional validity or applicability of Section 112 of the Finance Act 2000. - Petition disposed of
Issues:
Challenge to demand raised by Central Excise Department, Constitutional validity of Section 112 of Finance Act 2000. Analysis: 1. The petition challenges the demand raised by the Central Excise Department based on adjudication orders confirming the denial of MODVAT credit on High Speed Diesel oil (HSD) used for generating electricity and as fuel for manufacturing two-wheeler scooters. The constitutional validity of Section 112 of the Finance Act 2000, which validated the denial of credit on HSD from March 16, 1995, is also contested. 2. The petitioner, a manufacturer of two-wheeler scooters, utilized HSD as input for electricity generation and fuel during manufacturing. MODVAT credit for duty paid on HSD was claimed under Central Excise Rules. 3. Notifications issued in 1994 and 1995 excluded HSD from the list of eligible inputs for MODVAT credit. Amendments were made to allow credit for electricity generation along with fuel use. Subsequent notifications clarified the eligibility criteria for MODVAT credit on HSD. 4. Section 112 of the Finance Act 2000 was enacted to validate the denial of MODVAT credit on HSD from March 16, 1995. The legislative intent was to disallow credit on HSD used in manufacturing excisable goods. 5. The petitioner received a show cause notice in 1998 demanding repayment of MODVAT credit availed on HSD. Despite partial allowance by the Deputy Commissioner, subsequent orders upheld the demand, leading to appeals and penalties. 6. The Central Excise Gold Control Appellate Tribunal (CEGAT) confirmed the demand but reduced the penalty. The petitioner challenged the recovery of the demanded sum through refund claims, leading to multiple appeals and orders. 7. The Supreme Court in previous cases upheld the denial of MODVAT credit on HSD from March 16, 1995, citing the legislative intent and notifications. 8. The petitioner argued against the constitutional validity of Section 112, claiming it infringed on vested rights. However, subsequent developments led to the Department accepting the CEGAT's order, preventing further recovery of MODVAT credit on HSD prior to March 1, 1998. 9. The Court restrained the Department from enforcing demands related to MODVAT credit on HSD before March 1, 1998, based on the Department's previous acceptance of orders. This decision was specific to the case and not a precedent on the constitutional validity of Section 112. 10. The writ petition was disposed of based on the above terms, reflecting the unique circumstances of the case and the subsequent developments preventing further recovery of MODVAT credit on HSD prior to March 1, 1998.
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