TUNGABHADRAINDUS. LTD. versus UNION OF INDIA AND ORS.

Citation: [2000] 3 S.C.R. 1067 · Decided: 05-05-2000 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Dismissed

Judgment (excerpt)

· TUNGABHADRAINDUS. LTD. 
A 
v. 
UNION OF INDIA AND ORS. 
MAYS, 2000 
[G.B. PATTANAIK, DORAISWAMY RAJU AND S.N. VARIAVA, JJ.] 
B 
Excise Laws : 
Central Excise Rules, 1944 Chapter AAA Rules 57-K, 57-N & 57-0. 
Excise-Money Credit Scheme-Notification allowing credit of money-Noti-
fication further providing utilisation of credit towards payment of duty on final 
product-Notification rescinded-Subsequent notification issued-Both notifi-
cations providing maximum limit of utilisation of credit of Rupees one thousand 
per tonne-Assessee accumulating credits under both notification-Assessee 
seeking adjustment of credit simultaneously towards part payment of duty-
Wlzether pennissible-Held, accumulated credit will not ipso facto exhaust/ 
lapse on rescission of notification-Utilisation of credit accumulated shall be 
subject to tenns and conditions contained in notification-Under the facts, 
manufacturer not entitled to advantages of both notifications simultaneously in 
respect of one transaction for payment of duty. 
Central Government issued notification under Rule 57-K of the Cen-
tral Excise Rules, 1944 allowing credit of money in respect of vegetable oil 
subject to hydrogenation and further provided utilisation of said credit for 
payment of duty on final product subject to maximum limit of Rupees one 
thousand per tonne. The said notification was subsequently rescinded. 
Thereafter, another notification was issued providing similar credit for 
manufacture of same final product. 
Appellant-assessee filed reference before Excise authorities claiming 
utilisation of credit under both Notification towards payment of excise 
duty on final product. The said reference was disposed by holding that 
assessee-appellant is entitled to appropriate credit available to him under 
c 
D 
E 
F 
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both the notifications but not simultaneously and the credit utilised for 
payment of duty on manufactured product should not exceed Rupees one 
thousand per tonne. Notice was issued to appellant for recovery of excise 
duty. Appellant filed writ petition seeking stay of recovery contemplated 
under said Notice which was dismissed by High Court on the ground that 
identical question in another writ petition was answered against assessee. 
H 
1067 
~ ,_ 
I~ '. Ii 
1068 
SUPREME COURT REPORTS 
[2000] 3 S.C.R. 
A 
Hence this appeai by the assessee. 
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Appellant-assessee contended that accumulated credits under two 
different notifications could be availed simultaneously by assessee for_pay-
ment of duty on manufactured goods and condition in notification provid-
ing that amount of credit utilised should not exceed Rupees one thousand 
B 
per tonne shall not operate. 
Respondent contended that accumulated credit in favour of assessee 
under old notification could be utilised subject to conditions mentioned 
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therein and therefore, assessee cannot utilise accumulated credit under 
both notification simultaneously. 
c 
Dismissing the appeal, the Court 
HELD : 1. Rule 57-K(l) of the Central Excise Rules, 1944 itself 
stipulates accumulation of credit of money for use of inputs in the manu-
racture of final products can be availed or only, when a notification is 
D 
issued by the Central Government and that notification itself would pro-
vide the rates at which credit could be accumulated and also allowing such 
credit to be utilised for payment or duty on the final products and this must 
be subject to the conditions, if any, stipulated in the very notification itself. 
In the aforesaid scheme of the provision, the notification issued by the 
E 
Central Government in exercise of powers conferred under Rule 57-K, . 
..,.._ 
plays an important role. Paragraph (iii) of the Notification issued in the 
year 1987 unequivocally, provides that the amount of credit utilised for 
payment of duty shall not exceed Rs. 1000 per tonne of vegetable products 
on any individual clearance. It is thus clear that credits ma>! be accumu-
lated in favour of a manufacturer of vegetable products, pursuant to the 
F 
notification on the basis of rates provided in the notification on the inputs 
and that credit could be utilised for payment of duty while clearing the 
final product and the accumulated credit will not ipso facto get exhausted 
or lapsed on the rescinding or the notification issued under Rule 57-K of 
the Rules and therefore, notwithstanding the rescinding of the notifica-
G 
tion issued in the year 1987 by the notification dated 25th or ~ugust, 1989, 

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