TMI Blog2011 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants in support of his contention that the vested right created in their favour could not have been divested by the respondent retrospectively is found to be based on misreading of the language of the aforesaid notifications which do not support, but in fact destroy the very basis of the case of the appellants. – No credit on HSD - CA No. 476 of 2003 / 477-478 of 2003 / 479 of 2003 - - - Dated:- 18-3-2011 - Mukundakam Sharma and Anil R. Dave, JJ JUDGMENT Mukundakam Sharma, J 1. The issue that falls 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 ending with the day of Finance Act, 2000 which received assent of the President on 1st April, 2000. In Civil Appeal No. 476 of 2003: The appellants are engaged in the business of manufacturing and selling Man Made PV Blended Yarn and have installed a diesel generating set for generation of electricity for captive consumption in their factory premises. It is the case of the appellants that they purchased High Speed Diesel oil for generation of electricity from Indian Oil Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stock position of HSD oil as on 17.3.1997. They also prayed for condonation of delay in submitting the declaration. The Superintendent, Central Excise Range Beawar vide letter dated 25.6.1997 informed the appellant company that the MODVAT credit was not admissible on high speed diesel oil under Rule 57(A) of the Rules. 4. After denial of MODVAT credit, the appellant company was given a show cause notice bySuperintendentCentralExciseRange, Beawar to project as to why the credit given should not be disallowed to the appellant. 5. The appellant filed a writ petition in the year 1997 seeking direction to quash the Trade Notice No. 26/27, the entry regarding the explanation of the HSD Oil in the Notification No. 5/94 and also the order dated 2.9.1997. 6. The said writ petition came up for consideration before the Rajasthan High Court and by the impugned judgment and order dated 3.4.2002, the writ petition was dismissed. 7. Aggrieved by the aforesaid judgment and order, the present appeals were filed on which we heard the learned counsel appearing for the parties. 8. Counsel appearing for the parties drew our attention to Chapter V of the Rules which deals with levy of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant is not a validating Act, but in fact explanatory in nature in order to clarify and put in proper perspective the legal position as existing on the issue. It was also submitted that the courts have held that the power of the legislature to validate the acts done in respect of a particular provision is permissible particularly in respect of fiscal matter. Reference was also made to the decision of this Court in Central Excise, Meerut vs. Rama Vision Ltd. reported in 2005 (181) ELT 201 (SC), wherein it was held by this Court that no such MODVAT credit is available on the duty paid on HSD Oil as fuel in the generation of electricity for the period 16.3.1995 to 1.4.2000. 12. Reference was also made to the decision of this Court in M/s. Gujarat Ambuja Cement vs. UOI reported in 2005 (182) ELT 33 (SC), wherein this Court held that because of the inherent complexity of fiscal adjustments of diverse elements in the field of tax, the legislature has large discretion in classifying as to what should be taxed in which manner. It was also the submission of the learned counsel appearing for the respondents that the respondents never intended to allow any such credit which is being cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idate the action taken in the past on this basis. This amendment has become necessary to overcome certain judicial pronouncements." In this connection, memorandum to legislative changes, which is a part of the document is also required to be noted, which reads as under: "Modvat Credit on high speed diesel oil was not intended to be allowed at any stage. Suitable retrospective provision made to give effect to confirm this." 17. We are also concerned for the purpose of deciding the issues with the contents and scope of with Notification No. 5/94-CE(NT) dated 01.03.1994, Notification No. 8/95-CE(NT) dated 16.03.1995 and Notification No. 11/95-CE(NT) dated 16.03.1995. 18. Notification No. 5/94-CE(NT) dated 01.03.1994 was issued by the Central Government specifying therein the final products described in column (3) of the Table in respect of which credit of duty under MODVAT was made available. However, in the said table it was provided that high speed diesel oil which fell under tariff entry 2710.31 of the Central Excise Tariff Act, 1985, would not be considered as eligible input and it was specifically excluded from the list of eligible inputs. In the same notification, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso in Rule 57D by Notification No. 11/95-CE (NT) dated 16th March, 1995 they became entitled for the credit of duty paid on high speed diesel oil which was used for generation of electricity. 24. But in our observation, high speed diesel oil for the purpose of generation of electricity was specifically excluded from the list of eligible inputs in the Notification No. 5/94-CE(NT) dated1st March, 1994issued under Rule 57A also under Notification No. 8/95-CE(NT) dated 16.3.1995 from the list of eligible inputs. Therefore on a conjoint reading of the aforesaid Notifications dated1st March, 1994and 16.3.1995 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 electricity. 25. Our attention was also drawn to the Notification dated 1.3.1997 whereby the Central Government amended Central Excise Rules and the provisos of Rule 57D were deleted, but the appellants, however, claim that they became entitled to such benefit as per Rule 57B. Relevant part of which reads as follows: "57B. Eligibility of credit of duty on certain good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that high speed diesel oil would be considered as eligible input to get the benefit. 30. The intention regarding availment of the credit under MODVAT would be guided and governed by the aforesaid notifications which specifically excluded the benefit of availment of such credit as high speed diesel oil is specifically excluded from the list of eligible inputs as per notification under Rule 57A of the Central Excise Rules, 1944. Since it was specifically excluded from the list of eligible inputs such credit though may otherwise be available would not have credited a vested right. 31. Inthe light of the aforesaid factual as also legal position, this Court in the case of Commissioner of Central Excise, Hyderabad vs. Associated Cement Companies Ltd. reported in 2005 180 ELT 3 (S.C.) and Commissioner of Central Excise, Meerut vs. Rama Vision reported in 2005 181 ELT 201 clearly laid down the proposition that no credit is admissible on any duty paid on high speed diesel oil for the period commencing from 16.3.1995 and ending with the day of Finance Act, 2000 which received the assent of the President on 1st April, 2000. 32. Despite the aforesaid factual position, since the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention with regard to concept of MODVAT is concerned, the intention regarding availment of the credit under MODVAT would be guided and governed by the aforesaid notifications which specifically excluded the benefit of availment of such credit, as high speed diesel is specifically excluded from the list of eligible inputs as per the notification under Section 57A of the Central Excise Rules. Since, it was specifically excluded, such credit though may be otherwise available, could not have created any vested right. In our considered opinion the intention of the legislature is clear from the beginning to exclude the benefit of such credit by excluding high speed diesel oil from the list of eligible inputs by making substantial exclusion thereof in the notifications referred to hereinbefore. The aforesaid position is also verified by the decision of this Court in the case of Commissioner of Central Excise, Hyderabad vs. Associated Cement Companies Ltd. reported in 2005 180 ELT 3 (S.C.) and Commissioner of Central Excise, Meerut vs. Rama Vision reported in 2005 181 ELT 201 (supra). 37. The aforesaid decisions of this Court have clearly laid down the proposition that no credit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen by fiction making the tax already collected to stand under the re-enacted law. Sometimes the Legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon courts. The Legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the Legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a Validating Law, therefore, depends upon whether the Legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating Law for a valid imposition of the tax." 40. There are similar decisions to that effect of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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