2003 (1) TMI 124 - HC - Central Excise

Summary

Issues Involved:
Challenging the validity of Rule 57H(3) of the Central Excise Rules, 1944 and the order rejecting transfer of accumulated credits on inputs under the Modvat Scheme.

Summary:

Challenge to Rule 57H(3) Validity:
The Petitioners, engaged in manufacturing, challenged the validity of Rule 57H(3) of the Central Excise Rules, 1944, and an order rejecting the transfer of accumulated credits on inputs like oils and coolants under the Modvat Scheme introduced on 1st June, 1986.

Accumulated Credits Transfer:
The Petitioners sought to transfer unutilized credits from their old RG 23A Part II Register to the new one under the Modvat scheme for their two factories. The authorities partially permitted the transfer but refused to transfer the balance, citing non-inclusion of oils and coolants under the Modvat scheme.

Vested Rights and Legal Arguments:
The Petitioners argued that the unutilized credit on oils and coolants as of 1st March, 1986 was a vested right, citing a previous case where accrued rights could not be deprived. They highlighted the absence of provisions for lapsing of such credits under Rule 57H and Section 37 of the Central Excise Act.

Court Decision:
The Court held that the Petitioners' right to transfer the accumulated credit on oils and coolants was a vested right under the law, not subject to lapsing. The Court referenced a previous case to support its decision and emphasized that without specific provisions for lapsing, the credits could not be denied. Consequently, the Court quashed the order rejecting the transfer of credits.

Conclusion:
The Court ruled in favor of the Petitioners, allowing them to transfer the accumulated credits to the new RG 23A Part II Register under the Modvat scheme, setting aside the previous order.