EICHER MOTORS LTD. AND ANR. versus UNION OF INDIA AND ORS. ETC.

Citation: [1999] 1 S.C.R. 295 · Decided: 28-01-1999 · Supreme Court of India · Bench: S.P. BHARUCHA, K. VENKATASWAMI, S. RAJENDRA BABU · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

-"'" 
EICHER MOTORS LTD. AND ANR. 
A 
v. 
UNION OF INDIA AND ORS. ETC. 
JANUARY 28, 1999 
[S.P.BHARUCHA, K. VENKATASWAMI AND 
B 
S. RAJENDRA BABU, JJ.] 
Central Excises and Salt Act, 1944-Section 37-Power of Central 
Government to frame a scheme-Scope of-Explained. 
c 
Central Excise Rules, 1944--Rule 57-F(4A}-Applicability of-MOD-
VAT Credit lying balance with the assessee-Pursuant to amendment in Rule 
57F, [read as 57F (4A)], credit lying unutilised on 16.3.1995 with manufac-
turers stood lapsed-Held, Rule 57-F (4A) cannot be applied to the goods 
manufactured prior to 16.3.95 on which duty was paid and credit facility has D 
been availed for purpose of manufacture of further goods. 
Modvat credit was lying in balance with the assessees as on 
16.3.1995. Under existing law vested right accrued to the assessees allowing 
the duty paid on inputs as credit for payment of excise duty on the final 
products, in the manufacture of which such inputs were used. Thereafter, E 
with modification to Rule 57F, now read as 57F(4A) the credit lying 
unutilised on 16.03.1995 with the manufacturers stood lapsed. 
In these petitions, challenging the validity and application of the 
Rule 57F(4A) petitioner contended that Section 37 of the Central Excise F 
Act, 1944 does not enable the Central Government to frame a rule enabling 
' 
the lapsing of the balance in MODVAT account. The MODVAT credit lying 
in balance with the petitioners as on 16.3.1995, a vested right accrued to 
them under existing law which is sought to be taken by the modified Rule 
57F(4A). 
G 
The respondents submitted that the Rule 57F(4A) is only a part of 
·-~ 
a scheme providing for giving concessions under the taxation enactment. 
The scheme provided only for mode of adjustment of truces where no vested 
right accrued to the petitioners. Further, the Rule makes it clear that there 
shall be no credit by rationalising the duty structure and addition of any H 
295 
··- r: 
296 
SUPREME COURT REPORTS 
[1999] 1 S.C.R. 
I 
A input can be utilised upto particular point of time. Therefore, it was 
B 
permissible for. the authorities to frame Rule falling within scope of 
Section 37 of the Act enabling the lapsing of MODVAT credit lying un-
utilised on 16.03.1995 with the Petitioners. 
Allowing the· Petitions, this Court 
HELD : 1. If on the inputs the assessee had already paid the taxes 
on the basis that when the goods are utilised in the manufacture of further 
produces as inputs thereto then the tax on these goods gets adjusted which 
are finished subsequently. A right accrues to the assessees on the date 
C when they paid the tax on the raw materials or the inputs and that right 
would continue until the facility available thereto gets worked out or until 
those goods existed. Therefore, it becomes clear that Section 37 of the Act 
does not enable the authorities concerned to make Rule 57F(4A) and this 
rule cannot be applied to the goods manufactured prior to 16.3.1995 on 
D which duty had been paid and cr~dit facility thereto has been availed of 
for the purpose of manufacturer of further goods. [300-G-H; 301-A-B] 
2. When on the strength of the rules available certain acts have been 
done by the parties concerned, incidents following thereto must take place 
E 
in accordance with the scheme under which the duty had been paid on the 
manufactured products and if such a .situation is sought to be altered, 
necessarily it follows that right, which had accrued to a party such as 
availability of scheme, is affected and, in particular, it loses sight of the fact 
that provision for facility of credit is as good as tax paid till tax is adjusted 
on future goods on the basis of the several commitments which would have 
F been made by the assessees concerned. Therefore, the scheme sought to be 
introduced cannot be made applicable to the goods which had already come 
into existence in respect of which the earlier scheme was applied under 
which the assessees had availed facility for payment of taxes. It is on the 
basis of the earlier scheme necessarily the taxes have to be adjusted and 
payment made complete. Any manner or mode of application of the said 
G rule would result in affecting the rights of the assessees. [300-D-F] 
CIVIL ORIGINAL JURISDICTION: Transferred cases (C) Nos. 7 
and 8 of 1998. 
H 
Under Article 139A of the Constitution of India. 
t 
0 
EICHER MOTORS LTD. v. U .0.1. [RAJENDRA BABU, J.) 
297 
A.K. Ganguli, V.A. Moht~, A.N. Haksar, Raju Ramachan

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