LexUNION OF INDIA & ORS. versus MAHARAJA SHREE UMAID MILLS
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2013] 17 S.C.R. 271
UNION OF INDIA & ORS.
v.
MAHARAJA SHREE UMAID MILLS
(Civil Appeal No. 5634 of 2008)
DECEMBER.17, 2013
[ANIL R. DAVE AND DIPAK MISRA, JJ.]
A
B
MODVAT- Finance Act, 2000- s.112 - Central Excise
Rules, 1944 7 rr. 57(1), 57A, 578 - Respondent-assessee
availed MODVAT credit on HSD oil used as an input though
C
it was not permissible -
Amount wrongly availed by
respondents by way of MODVAT credit recovered by the
Revenue with i.nterest thereon - Recovery of wrongfully
availed MODVAT credit with interest - Justification - Held:
By virtue of s. 112 of the _2000 Act, if anybody had wrongfully
D
availed MODVA T credit on the HSD oil used as an input, it
was to return such amount within 30 days and in case the
amount was not refunded within 30 days, the amount had to
be returned with interest at the rate of 24% p.a. - On facts,
the respondent-assessee did not return the wrongfully availed
E
MODVAT credit even within 30 days, and thus, was required
to return the same with interest at the rate of 24% p.a. - Such
a course, adopted by the Revenue for recovery of the amount
was legitimate - Central Excise Tariff Act, 1985 - Chapters
52, 54 & 55 of the Schedule.
The respondent-assessee is a manufacturer of yarn
and fabrics, which are covered under Chapters 52, 54 &
55 of the Schedule to the Central Excise Tariff Act, 1985.
F
In the process of the manufacture of yarn and fabrics, the
responclent-assessee uses High Speed Diesel Oil ('HSD
G
Oil') as fuel for generation of electricity i.e. power, with
which manufacturing unit of the respondent is operated.
As the HSD oil is being used as an input in the process
of generation of electricity so as to manufacture the final
271
H
272
SUPREME COURT REPORTS
[2013] 17 S.C.R.
A produce i.e. yarn and fabrics, the respondent was
claiming the MODVAT credit of the duty paid on the HSD
oil used as an input under the provisions of Rules 57A
and 578 of the Central Excise Rules, 1944.
8
The Central Government issued a Notification on
16th March, 1995 whereby MODVAT credit of the duty
paid on the HSD Oil as an input, was withdrawn.
Subsequently, the Commissioner of the Central Excise
also issued a Trade Notice on 7.4.1997 to the effect that
no MODVAT Credit in respect of the duty paid on the HSD
C oil used as an input would be available under Rule 57A
and 578 of the Rules.
The respondent as well as other assessees-
respondents had availed the MODVAT credit of the duty
D paid on the HSD Oil, which was used as an input even
though it was not permissible in view of the aforestated
Notification followed by the Trade Notice. In the
aforestated circumstances, show cause notices had been
issued to all the respondents calling upon them as to
E why the MODVAT credit availed by them during the
period for which they were not entitled to such a credit,·
should not be withdrawn and why interest at the rate of'
24% p.a. be not charged on the amount of credit already
availed by them.
F
In the meantime Section 112 of the Finance Act, 2000
was enacted and by virtue of which, interest at the rate
of 24% p.a. had to be paid on the MODVAT credit
wrongfully availed by the respondents in respect of the
duty paid on the HSD Oil used as an input for a particular
G period. Similarly, Rule 57 (I) of the Rules also enables the
Revenue to recover interest on the amount of MODVAT
credit wrongfully availed by the assessee.
The case of the Revenue is that by virtue of the
H provisions of Section 112 of the 2000 Act, interest
UNION OF INDIA v. MAHARAJA SHREE UMAID
273
MILLS
becomes payable on such wrongfully availed MODVAT
A
credit after 30 days from the date on which the 2000 Act
received the assent of the President. The Assistant
Commissioner, Central Excise, called upon the
respondent-assessee to pay interest at the rate of 24%
p.a. with effect from 30 days from the date on which the
B
2000 Act had received the assent of the President. The
order was upheld by the Commissioner (Appeals),
Central Excise, the Appellate Tribunal (CESTAn as also
the High Court, and therefore, the present appeals.
Allowing the appeals, the Court
HELD:1.1. By virtue of the Notifications issued on
01.03.1994 and 16.03.1995 under Rule 57A of the Rules,
c
the Central Government had specifically declared that
MODVAT credit on the HSD oil used as an input would
D
not be available as the said item had been specifically
excluded from the liExcerpt shown. Read the full judgment & AI analysis in Lexace.