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2012 (5) TMI 210 - HC - Central ExciseConstitutional validity - Restriction on Cenvat / Modvat Credit on inputs when imported - petroleum products - restriction imposed retrospectively - but the same restriction was deleted prospectively - Constitutional validity of Section 87 of the Finance Act, 1997 and Section 11a of the Central Excise Act - Notification No.14/97-Central Excise (NT) - held that:- It is a settled legal proposition that if initial action is not in consonance with law, subsequent proceedings would not sanctify the same. In such a fact situation, the legal maxim sublato fundamento cadit opus is applicable, meaning thereby, in case of foundation is removed, the superstructure falls. Similar principle of law, in our opinion, can be extended in the present case too. Though the restriction operated for about 16 months, the action of not allowing the Modvat credit of the actual amount paid as additional duty to the petitioner-Company is in violation of Article 14 of the Constitution of India because such a restriction was unreasonable and arbitrary even during the intervening period i.e. during the period of operation. The petition is accordingly allowed. It is hereby declared that the Notification No.14/1997 dated May 3, 1997 restricting admissibility of Modvat credit for all the petroleum products to the extent of 10% irrespective of the fact that whether the inputs were manufactured in India or the inputs were imported into India, being violative of Article 14 of the Constitution of India, is hereby quashed and set-aside.
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