1993 (12) TMI 68 - HC - Central Excise

Issues Involved:

1. Whether the writ petition was premature and should have been dismissed as such?
2. Whether the accumulated credit under Notification No. 27/87 lapsed with the rescission of the said notification and could not be utilised by the respondents after 25-8-1989 in connection with clearances of final product Vanaspati cleared ex-factory gate after that date?
3. Whether the accumulated credit under Old Notification No. 27/87 could be utilised contrary to condition No. 3 laid down by the said notification in connection with future clearances of Vanaspati oil after the rescission of the said notification and whether the respondents could legitimately urge that balance of duty of Rs. 900 per Metric Tonne of Vanaspati cleared during the currency of Notification No. 45/89 could be adjusted against the credits accumulated during the currency of earlier Notification No. 27/87?
4. What final order?

Detailed Analysis:

Issue 1: Prematurity of the Writ Petition

The appellants contended that the writ petition was premature as it was moved against a show cause notice, and the respondents had ample remedy under the Act to file objections and pursue further proceedings if the decision went against them. However, this contention was not raised before the learned Single Judge, and both sides had joined issues on merits. The respondents had also challenged the vires of Notification No. 39/89, which could not have been canvassed before the Departmental Authorities. Therefore, the writ petition was maintainable, and the first point for determination was answered in the negative, in favor of the respondents and against the appellants.

Issue 2: Lapse of Accumulated Credit

The respondents argued that the accumulated credit earned during the currency of Notification No. 27/87 did not lapse upon its rescission and could be utilized for future clearances of Vanaspati. The statutory scheme under Rule 57N and 57O, along with Form RG 23(B) Part II, indicated that accumulated credit earned during the currency of the notification enured for the benefit of the manufacturer and could be utilized for future clearances. This view was supported by judgments from several High Courts, including Gujarat, Punjab & Haryana, Andhra Pradesh, and Delhi High Courts. Therefore, the second point for determination was answered in the negative, in favor of the respondents and against the appellants.

Issue 3: Utilization of Accumulated Credit

The appellants contended that even if the accumulated credit under the old notification did not lapse, its utilization was subject to condition No. 3 of Notification No. 27/87, which limited the credit utilization to Rs. 1,000 per tonne of Vanaspati cleared, and the balance of Rs. 900 had to be paid in cash. The respondents argued that they were entitled to utilize the accumulated credit under both the old and new notifications, allowing them to clear Vanaspati without paying any cash duty. However, the court held that the utilization of accumulated credit was subject to the conditions of the respective notifications, and only one debit entry of Rs. 1,000 per tonne was permissible. Therefore, the third point for determination was answered in the negative, against the respondents and in favor of the appellants.

Final Order:

The court concluded that the respondents were entitled to partial relief. The order passed by the learned Single Judge was set aside and substituted with a writ of mandamus directing the appellants to permit the respondents to utilize the accumulated credit under Notification No. 27/87, subject to verification of the amount and the condition that the utilization per tonne of Vanaspati cleared would be limited to Rs. 1,000, with the balance of Rs. 900 to be paid in cash. The benefit of Notification No. 45/89 would also be available, but the utilization of accumulated credit under both notifications would be subject to the upper limit of Rs. 1,000 per tonne. The writ appeal was allowed in part, and the writ petition was also allowed in part. No order as to costs was made.

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