1990 (10) TMI 91 - HC - Central Excise

Summary

Issues: Interpretation of Central Government notifications on excise duty credit for inputs in manufacturing vanaspati; Retrospective application of notifications; Principles of promissory estoppel in excise duty matters.

In this judgment by V.S. Dave, J., the petitioner, a firm manufacturing vanaspati, challenged the denial of excise duty credit by respondent No. 2 based on a Central Government notification issued on 25th August, 1989, which withdrew a previous notification from 1st March, 1987. The petitioner claimed credit amounting to Rs. 23,52,158 for oil purchased before 25th August, 1989. The Court noted that a similar case, SB Civil Writ Petition No. 3791/89 - M/s. PVP Limited v. Union of India, had been allowed by Hon'ble S.N. Bhargava, J., on 8th October, 1990, holding that the 1989 notification could not have retrospective effect. The Court also recognized the application of promissory estoppel, preventing the government from retracting the credit earned under the earlier notification. The judgment in PVP Ltd. v. Union of India established that the principles of promissory estoppel applied in excise duty matters, protecting the petitioner's right to the credit earned under the 1987 notification.

The Court, concurring with the reasoning in the judgment by Hon'ble S.N. Bhargava, J., allowed the writ petition. The respondents were directed to allow the petitioner to utilize the credit earned under the 1987 notification until 24th August, 1989. Any excess duty collected beyond what was payable under the 1987 notification was to be refunded to the petitioner. However, the petitioner was not granted any further concessions or exemptions under the 1987 notification, nor could they claim credit for using non-traditional oil between 25th August, 1989, and 10th October, 1989. The Court made it explicit that no costs were awarded in this matter.

In conclusion, the judgment clarified the rights of the petitioner regarding excise duty credit for inputs used in manufacturing vanaspati, emphasizing the non-retrospective application of the 1989 notification and the application of promissory estoppel to protect the petitioner's accrued credit. The decision ensured the petitioner's entitlement to utilize the credit earned under the 1987 notification and receive refunds for any excess duty paid, while also limiting the scope of benefits under the earlier notification for the specified period.