2004 (6) TMI 46 - HC - Central Excise

Refund of accrued money credit in cash after the abolition of excise duty - Money credit scheme -Relocation of the factory - manufacturing unit towards duty payable for another unit - HELD THAT - In this case, there is no dispute that the petitioner no. 1 had acquired money-credit to the extent of Rs. 17,32,78,689/- in terms of the notification under the money-credit scheme. Such money credit scheme permitted the petitioner no. 1 to utilise such credit for an amount not exceeding Rs. 1000/- per MT at any time after the succeeding month in which the money-credit accrued. Thus, the petitioner no. 1 is entitled to invoke such vested right in accordance with the conditions mentioned in the notification as it then stood. The aforesaid point is, thus, answered in favour of the petitioner no. 1. Relocation of the factory - The licence authorises the licence holder to undertake manufacturing operation at the premises mentioned in the registration certificate. If one wants to operate manufacturing process from more than one premise, separate registration is to be made for each of those premises. The object of such separate registration is to ensure proper supervision by the Inspectors for proper accounting of the credit, goods manufactured, assessment of duty, etc. in respect of the goods produced at different places. But scheme granting money-credit did not require that such credit is to be utilised only for the payment of duty by the manufacturer in respect of goods produced at the same unit and not at the different units maintained by the same manufacturer. Such right really accrues to the asset and it passes to the person who owns such asset. Thus, it is preposterous to suggest that a manufacturer cannot get the credit benefit in respect of the goods manufactured at his different units and such benefit should be limited to the duty payable and the production of the selfsame unit. I, therefore, hold that there is no impediment in getting adjustment of the money credit accrued in respect of the goods manufactured at New Alipore towards duty payable for the goods produced at the Bangannagar factory. It may not be out of place to mention here that both the aforesaid factories are registered and licensed. The aforesaid question is, thus, answered in favour of the petitioner no. 1. The first writ application was dismissed as the scheme did not permit a cash refund. The second writ application succeeded, allowing the petitioner to adjust the accrued money credit towards duty payable for goods manufactured at different units. No costs were awarded.

Summary

Issues Involved:
1. Refund of accrued money credit in cash after the abolition of excise duty.
2. Adjustment of accrued money credit towards duty payable after the abolition of the money-credit scheme.
3. Adjustment of money credit accrued from one manufacturing unit towards duty payable for another unit.

Summary:

Issue 1: Refund of Accrued Money Credit in Cash
The petitioner sought a refund of the accrued money credit in cash after the abolition of excise duty on vanaspati from July 23, 1996. The court found substance in the respondents' contention that the scheme did not provide for a cash refund. Referring to the decision in *Kusum Products Limited v. Union of India*, the court held that the petitioner is not entitled to a cash refund of the accrued benefit under the scheme. The first writ application (W.P. No. 137 of 2000) was thus disposed of with this observation.

Issue 2: Adjustment of Accrued Money Credit Post-Abolition of Scheme
The petitioner argued that the omission of the rules could not divest the accrued right to adjust the money credit towards duty payable for a subsequent period. The court agreed, citing Section 38A of the Central Excise Act, 1944, which preserves accrued rights despite amendments or repeals of rules or notifications. The court referenced the Supreme Court decisions in *Tungabhadra Industries Limited v. Union of India*, *Eicher Motors Limited v. Union of India*, and *Samtel India Limited v. Commissioner of Central Excise*, which supported the preservation of accrued rights. The court concluded that the petitioner is entitled to invoke the vested right to adjust the money credit as per the conditions of the original notification.

Issue 3: Adjustment of Money Credit Across Different Units
The petitioner contended that the money credit accrued from production at the New Alipore unit should be adjustable towards the duty payable for goods manufactured at the Bangannagar unit. The court examined the relevant provisions of the Central Excise Rules and found that the scheme did not restrict the utilization of money credit to the same manufacturing unit. The court held that the benefit of money credit could be applied across different units of the same manufacturer, as the credit accrues to the manufacturer and not to a specific unit. The second writ application (W.P. No. 983 of 2003) was thus allowed, and orders were issued in terms of prayers (a) and (b) of the writ application.

Conclusion:
The first writ application was dismissed as the scheme did not permit a cash refund. The second writ application succeeded, allowing the petitioner to adjust the accrued money credit towards duty payable for goods manufactured at different units. No costs were awarded.