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TMI Blog1997 (10) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3A of Central Excise Act, 1944 apart from Notifications Nos. 24/97, 30 to 34/97, 57/97 and 58/97 and all other connected notifications. In addition, the petitioners have also made a grievance of the scheme whereby Modvat credit standing to the credit of various petitioners to the withdrawal of Modvat credit w.e.f. 1-8-1997. Not only that, by that very scheme/decision, respondent No. 1 has deprived the petitioners of the Modvat credit already accrued and available to them. The lapse of the Modvat credit in the account of the assessees is in the nature of giving retrospective effect to the said notification whereby the credit already earned is sought to be taken away. In the original Act prior to the enactment of Section 3A, the charging section imposed liability to excise duty on the goods manufactured which was in consonance with Entry No. 84 in List 1 of Seventh Schedule of the Constitution of India. Although the petitioners have raised important questions of law, as would appear from what is observed hereinafter. We are confining our order only to interim relief, sought by the petitioners in these petitions except C.W.P. Nos. 1231/96 and 1400/96 wherein no application for inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowed to be sold in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under Section 12 of the Customs Act, 1962 (52 of 1962), on like goods produced or manufactured outside India, if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975). (2) Where a notification is issued under sub-section (1), the Central Government may, by rules, provide for determination of the annual capacity of production, or such factor or factors relevant to the annual capacity of production of the factory in which such goods are pro- duced, by the Commissioner of Central Excise and such annual capacity of pro-duction shall be deemed to be the annual production of such goods by such factory; Provided that where a factory producing notified goods is in operation only during a part of the year the production thereof shall be calculated on proportionate basis of the annual capacity of production. Explanation 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s produced or manufactured. (i) in a free trade zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and allowed to be sold in India. Explanation I . - For the removal of doubts, it is hereby clarified that for the purposes of Section 3 of the Custom Tariff Act, 1975 (51 of 1975), the duty of excise leviable on the notified goods shall be deemed to be the duty of excise leviable on such goods under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), read with any notification for the time being in force. 1A. The provisions of sub-section (1) shall apply in respect of all excisable goods other than salt which are produced or manufac- tured in India by, or on behalf of, Government, as they apply in res- pect of goods which are not pro- duced or manufactured by Govt. Explanation 2. - For the purpose of this section, the expressions free trade zone and `hundred per cent export-oriented undertaking shall have the meanings assigned to them in Section 3." (2) The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty from the factory prior to 16-3-1995. It is, therefore, contended that the rule seeks to lapse the credit which has already become final and absolute and vests in the petitioners as their property and is, therefore, confiscatory in nature on account of its retrospective operation whereby the credit already standing in the account of a manufacturer is taken away. Not only that, it creates new disability. A statute is deemed to be retrospective which takes away or impairs any vested right acquired under the existing laws and creates a new obligation or imposes a new duty or attaches a new disability in respect of the transactions or considerations already past. Therefore, the operation of this rule is contended to be retrospective in nature which is beyond the rule making powers of the Government under the Act. The petitioners have placed reliance on Sri Vijaylakshmi Rice Mills, New Contractors Co. etc. v. State of Andhra Pradesh - AIR 1976 SC 1471 (1473), K. Eapen Chako v. The Provident Investment Company (P) Ltd. - AIR 1976 SC 2610 (2617) and Govinddas and Others v. The Income Tax Officer and Another - AIR 1977 SC 552 (558) in support of their argument that the lapse of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result of the duty paid on inputs before the notifications. In this case, this Court had approved the ratio of the decisions of Gujarat and Punjab Haryana High Courts in the case of Amrit Banaspati Co. Ltd. v. Union of India - 1990 (50) E.L.T. 64 (P H) and Deepak Vegetable Oil Industries Ltd. v. Union of India - 1991 (52) E.L.T. 222 (Guj.). Subsequently similar matters came up for decision before High Courts of Karnataka, Andhra Pradesh, Madras and Rajasthan. In the following judgment other High Courts have also approved the aforesaid view :- (1) Modern Mills Ltd. v. U.O.I. - 1991 (55) E.L.T. 148 246; (2) Agarwal Industries Ltd. v. U.O.I. - 1992 (57) E.L.T. 561; (3) Madras Banaspati s case - 1992 (61) E.L.T. 6; and (4) Hans Raj Udyog v. U.O.I. - 1992 (61) E.L.T. 238. 10. In view of the consistent line of decisions mentioned hereinabove, it cannot be said that the petitioners have no case in their favour. On the contrary it is a matter which calls for consideration in detail in view of the aforesaid important questions of law. In the circumstances, we allow the application and direct that the operation of the rules relating to lapsing of Modvat credit shall remain s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminatory in their working and in nature. Various other rulings were also cited at the Bar which, it is not necessary for the time being to deal with in detail. Some of those rulings are noted hereunder : 1. U.O.I. v. A. Sanyasi Rao Ors. - AIR 1996 SC 1219; 2. Govind Saran Ganga Saran v. CST Ors. - AIR 1985 SC 1041; 3. McDowell Co. Ltd. v. CTO - 1985 (154) ITR 148 SC; 4. K.T. Moopil Nair v. State of Kerala - AIR 1961 SC 552; 5. Khandelwal Metal Engg. Works v. Union of India - 1985 (20) E.L.T. 222 (S.C.) = AIR 1985 SC 1211; 6. State of Punjab v. Jaswant Theatre - 1990 (186) ITR 655 (P H); 7. Oudh Sugar Mills v. U.O.I. - 1978 (2) E.L.T. 172 (SC); 8. Supdt. of Central Excise v. Sri Krishna Vanaspati Products - 1995 (80) E.L.T. 484 (Mad.); 9. Goodyear India Ltd. v. U.O.I. - 1990 (49) E.L.T. 39 (Del.); 10. C.C.E. v. Wipro Information Technology - 1988 (33) E.L.T. 172 (Tri.); 11. CCE v. Garware Paints Ltd. - 1986 (25) E.L.T. 399 (Tri.); 12. Karnataka Soaps Detergents Ltd. v. CCE. - 1994 (70) E.L.T. 738 (Tri.). 13. It is very peculiar that while referring to these notifications, we find that the term composite plant has been differently defined in dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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