SANGAM SPINNERS L TO. , versus UNION OF INDIA & ORS.

Citation: [2011] 3 S.C.R. 1033 · Decided: 18-03-2011 · Supreme Court of India · Bench: MUKUNDAKAM SHARMA · Disposal: Dismissed

Judgment (excerpt)

[2011] 3 S.C.R. 1033 
SANGAM SPINNERS L TO. , 
v. 
' UNION OF INDIA & ORS. 
(Civil Appeal No. 476 of 2003) 
MARCH 18, 2011 
[DR. MUKUNDAKAM SHARMA AND 
ANIL R. DAVE, JJ.] 
A 
B 
Central Excise Rules, 1944 - rr. 57 A and 578 - High , 
Speed Diesel Oil - MODVAT credit - Benefit of - High 
C 
Speed Diesel Oil used for the purpose of generation of 
, electricity.- Credit of duty paid on High Speed diesel Oil on 
17118.03.1997 - Entitlement for - Held: Not entitled as High . 
· Speed Diesel Oil was specifically excluded from the list of 
eligible inputs as per the Notifications dated 01.03.1994 and· 0 
16. 03. 1995 - Since the product High Speed Diesel Oil was · · · 
. excluded specifically from the list of eligible inputs in the · 
Notifications, there was no question of creation of any rightin 
favour of. th~ appellant to avail such benefit - Therefore, it 
cannot be said that a vested or accrued right is sought to be 
E 
taken away by an Act of Parliament giving retrospective effect 
· - Central Excise Act, 1944 - Finance· Act, 2000 ,...Notifications 
· ..;. Notification No. 5194-CE(NT) dated 01.03.1994 and 
Notification No. 8195-CE(NT) dated 16.3.1995. 
,'1f; 
It is the case of the appellants that they used High .F 
Speed Diesel Oil as input/goods in diesel generation set 
for generation of electricity which in turn is used in the 
manufacture of final goods or for other purposes In the 
factory of the appellants.· They submitted declarations· In 
respect of the diesel as well as, oil and lubricants a$ 
G 
required under Rule 57G read with Rule 578 as also under 
Rule 57(H) of the Central Excise Rules, 1944, Intending 
to avaUthe credit of duty on the said goods/inputs on 17/ 
18.3.1997 but were informed that after 1.3.1997, MODVAT 
1033 
H 
1034 
SUPREME COURT REPORTS 
[2011} 3 S.C.R. 
A credit was not available on High Speed Diesel Oil. The 
appellant was issued show cause notice as to why the 
credit given should not be disallowed to the appellant. 
Aggrieved, the appellant filed a writ petition and the same 
was dismissed. 
B 
The question which arose for consideration in these 
appeals is whether the appellants are entitled to credit of 
duty paid on High Speed Diesel Oil at any time during the 
period commencing on and' from 16th March, 1995 and 
C ending with the day of Finance Act, 2000 which received 
assent of the President on 1st April, 2000. 
Dismissing the appeals, the Court 
HELD: 1.1. High Speed Diesel Oil for the purpose of 
o generation of electricity was specifically excluded from 
the list of eligible inputs in the Notification No. 5/94-
CE(NT) dated 1st March, 1994 issued under Rule 57A of 
the Central Excise Rules, 1944 as also under Notification 
No. 8/95-CE(NT) dated 16.3.1995 from the list of eligible 
E inputs. Therefore, on a conjoint reading of the said 
Notifications as also the amendment to Rule 57D, it is 
sufficiently indicated that the appellants are not entitled 
to credit of duty paid in respect of High Speed Diesel Oil 
which was used for the purpose of generation of 
F electricity. [Para 24] [1045-G-H; 1046-A-B] 
1.2. A careful reading of the explanation to Rule 57B 
in sub-rule (1) would make it explicitly clear that by. 
adding the said explanation by Notification No. 5/98-
CE(NT) dated 2.3.1998, the inputs mentioned in Rule 578 
G refers only to such inputs as specified in the Notification 
issued under Rule 57A. Thus, the appellants are not 
entitled to get the benefit of, credit of duty paid on High 
Speed Diesel oil as High Speed Diesel 011 Is excluded 
from the list of eligible inputs as per Notification issued 
H under Rule 57A of the Rules. [Para 28) [1047-D-E] 
SANGAM SPINNERS LTD. v. UNION OF INDIA & 1035 
ORS. 
1.3. The intention regarding availment of the credit A 
under MODVAT would be guided and governed by the 
said Notifications which specifically excluded the benefit 
of availment of such credit as High Speed Diesel Oil is 
specifically excfuded from the list of eligible inputs as per 
Notification under Rule 57 A of the Central Excise Rules, s 
1944. Since it was specifically excluded from the list of 
eligible inputs such credit though may otherwise be 
available would not have created a vested right. The 
intention of the legislature is clear from the beginning to 
exclude the benefit of such credit by excluding High c 
Speed Diesel Oil from the list of eligible inputs by making 
substantial exclusion thereof in the Notifications. [Paras 
30 and 36] (1048-8; 105

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