1990 (10) TMI 88 - HC - Central Excise

Summary

Issues:
1. Interpretation of Central Excise Rules regarding the utilization of accumulated credit earned by a manufacturer of vegetable products under Notification 27/87.
2. Validity of the department's decision to disallow the utilization of accumulated credit after the rescinding of Notification 27/87.
3. Application of the principle of promissory estoppel in the context of the notification issued under the Central Excise Rules.

Analysis:
The judgment revolves around the interpretation of Central Excise Rules concerning the utilization of accumulated credit earned by a manufacturer of vegetable products under Notification 27/87. The petitioner, a manufacturer of vegetable products, claimed the right to set off the accumulated credit of Rs. 47,58,093.90 earned up to 25-8-1989 against the excise duty payable on final products post the rescinding of the said notification. The department contended that the petitioner lost the right to utilize the accumulated credit after the rescission of Notification 27/87. The petitioner relied on judgments from Gujarat and Punjab & Haryana High Courts, which held that the manufacturer could continue to utilize the credit even after the rescission of the notification. The High Court agreed with the petitioner, emphasizing that the accumulated credit does not vanish upon rescission, and the principle of promissory estoppel applies in this case.

The court highlighted that the scheme under Notification 27/87 aimed to incentivize the production of edible oils from non-conventional sources by offering rebates on using such oils as inputs in manufacturing vegetable products. The court noted that the accumulated credit does not cease upon rescission of the notification, and all rights accrued to the manufacturers remain intact. The court also referenced a subsequent notification, 45/89, which restored Notification 27/87, indicating that the benefits under the restored notification would be additional to the accumulated credit earned by the petitioner.

Ultimately, the court allowed the writ petition, directing the issuance of a writ of mandamus to permit the petitioner to utilize the accumulated credit subject to verification of the amount. The court rejected the department's argument that the principle of promissory estoppel does not apply to notifications issued under the Central Excise Rules, citing precedents where similar principles were upheld in favor of small-scale industries. The judgment emphasized the importance of honoring commitments made through such notifications and ensuring that accrued benefits are not unjustly taken away.