COMMISSIONER OF CENTRAL EXCISE, MADRAS versus M/S. HOME ASH OK LEYLAND LTD.

Citation: [2007] 4 S.C.R. 90 · Decided: 19-03-2007 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
c 
COMMISSIONER OF CENTRAL EXCISE, MADRAS. 
v. 
MIS. HOME ASH OK LEYLAND LTD. 
MARCH 19, 2007 
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] 
Central Excise Rules, 1944; rr. 57A, E & G with amendments made 
thereunder: 
MOD VAT credit-Availing of credit on differential amount of duty paid 
during certain period-Applicability of amended Rule 57E--Held: Under the 
provision of amended Rule 57E, right of manufacturer to obtain credit in 
respect of inputs on which further duty had been paid is recognized-Subject 
to complying with the adjustment procedure as contemplated in Rule 57E as 
D amended-Right to claim MODVAT credit provided unde.r Rule 57A-Rule 
57E not only recognizes the right to claim credit but also the extent to which 
cr~dit could be claimed for duty paid on inputs-Since R 5 7 E is procedural 
and clarificatory as such it would not affect the substantive rights of the 
manufacturer to claim ]\,fODVAT credit for duty paid on inputs subsequent to 
the date of its receipt-Hence, assessee entitled to avail the credit for the 
E specified period 
The question which arose for determination in this appeal is as to 
whether the assessee, a manufacturer of motor vehicles, was entitled to avail 
MODV AT credit on differential amount of duty paid. during the period 
F 21.4.1986 to 2.4.1987 in respect of inputs received in hi> factory during the 
year 1986-87 but were utilized between the period 16.8.1.987 and 30.12.1987. 
Revenue contended that Rule 57E of Central Excise Rules, 1944 
underwent an amendment with effect from 15.4.1987 which according to the 
department operated prospectively and consequently the claimant was not 
G entitled to avail MODV AT credit on differential amount 9f/duty paid during 
the specified period. 
H 
Dismissing the appeal, the Court 
HELD: 1.1. U oder the amended Rule 57E of the Central Excise Rules, 
90 
COMMNR. OF CENTRAL EXCISE, MADRAS. 1·. HOME AS HOK LEYLAND LTD. 
9 J 
the right of the manufacturer to obtain additional MODY AT credit in respect A 
of inputs on which further duty had been paid for any reason subsequent to 
the date of the receipt of inputs by the manufacturer is recognized. However, 
such right accrues to the manufacturer subject to his complying with the 
procedure of adjustment contemplated in Rule 57E of the Rules, as amended. 
[Para 2) [93-DI B 
1.2. There can be no doubt that right from its inception the right to 
claim MODY AT credit is under Rule 57 A of the Rules. Rule 57 A recognizes 
the right of the manufacturer to claim credit. Rule 57E recognizes not only 
the right of the manufacturer to claim credit but also the extent to which 
credit could be claimed for the duty paid on inputs. Therefore, Rule 57 A is a C 
substantive provision. However, the procedure of adjustment finds place in Rule 
57E of the Rules. (Para 3) [93-E] 
1.3. The object behind enacting Rules 57A, 57E and 57G of the Rules 
is to avoid duty on duty whereby the price of the final product is loaded. 
(Para 31 (93-Fl D 
1.4. Rule 57E deals only with adjustment in the duty credit. Rule 57G 
states that credit shall not be taken unless the manufacturer of the final 
product maintains his records regarding receipt of the inputs in its factory. 
(Para 3) (93-G) 
2. The Courts below were right in holding that Rule 57E of the Rules 
is procedural, clarificatory and therefore would not affect the substantive 
rights of the manufacture of the specified final product to claim MODY AT 
credit for the duty paid on the inputs subsequent to the date of the receipt of 
those inputs. Consequently, the respondent-manufacturer in the present case 
was entitled to take credit for the period between 16.8.1987 to 30.12.1987 in 
the sum ofRs.6,43,994.57. [Para 4) (94-A-B) 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8607 of2001. 
E 
F 
From the Final Judgment and Order dated 16.10.2000 of the High' Court 
of Judicature at Madras in Ref. Case No. 8 of 1997. 
G 
V. Shekhar, Ajay Sharma, Pradeep K. Dubey, Sudhir Kr. Sajwan and B. 
-i 
Krishna Prasad for the Appellant. 
Amit Kumar Sharma, Gaurav Goel, Mashesh Agrawal, E.C. Agrawala H 
92 
SUPREME COURT REPORTS 
P007] 4 S.C.R. 
A and Rishi Agrawala for the Respondent. 
The Judgment of the Court was delivered by 
·KAPADIA, J. I. In this civil appeal filed by the department the short 
question which arises for determination is whether _the assessce was entitled 
B to avail MODY AT credit on differential duty paid during the pe:riod 21.4.1986 
to 2.4.1987 in
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