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TMI Blog1999 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... hvi Ashok Kumar Singh, Indu Malhotra, M.L. Lahoty, Paban K. Sharma, Himanshu Shekhar, R. Anand Padmanabhan, Rajeev Kapoor, and Rakesh K. Sharma, Advs Judgment S. Rajendra Babu, J. In these petitions validity and application of the Scheme, as modified by introduction to Rule 57F [read as 57F(4A)] of the Central Excise Rules, 1944, under which credit which was lying unutilised on 16th March, 1995 with the manufacturers, stood lapsed in the manner set out therein is questioned. 2. The relevant rule reads as follows :- "(4A) : Notwithstanding anything contained in sub-rule (4), or sub-rule (1) of rule 57A and the notifications issued thereunder any credit of specified duty lying unutilised on the 16th day of March, 1995 with a manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abling the lapsing of the balance in Modvat account and is therefore ultra vires the rule making power. 4. The rule is vitiated on the grounds of promissory estoppel and/or the doctrine of legitimate expectation. 4. On behalf of the respondents it is submitted that impugned Rule 57F(4A) is only a part of a scheme providing for giving concessions under the taxation enactment. The scheme need not be continued for all time to come and could be put to an end at any time and thus all that has happened is that the scheme which was available earlier is no longer available and, therefore, it is not open to contend that the scheme affects any vested right; and, that under the scheme it is only a mode of adjustment of taxes which were provided and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities to frame the rule in question which fell within the scope of Section of 37 of the Act. 5. Rule 57F(4A) was introduced into the Rules pursuant to Budget for 1995-96 providing for lapsing of credit lying unutilised on 16-3-1995 with a manufacturer of tractors falling under Heading No. 87.01 or motor vehicles falling under Heading No. 87.02 and 87.04 or chassis of such tractors or such motor vehicles under Heading No. 87.06. However, credit taken on inputs which were lying in the factory on 16-3-1995 either as parts or contained in finished products lying in stock on 16-3-1995 was allowed. Prior to 1995-96 Budget, central excise/additional duty of customs paid on inputs was allowed as credit for payment of excise duty on the final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs and carried the credit towards excise duty payable on the finished products. For the purpose of utilisation of the credit all vestitive facts or necessary incidents thereto have taken place prior to 16-3-1995 or utilisation of the finished products prior to 16-3-1995. Thus the assessees became entitled to take the credit of the input instantaneously once the input is received in the factory on the basis of the existing scheme. Now by application of Rule 57F(4A) credit attributable to inputs already used in the manufacture of the final products and the final products which have already been cleared from the factory alone is sought to be lapsed, that is, the amount that is sought to be lapsed relates to the inputs already used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said rule would result in affecting the rights of the assessees. 6. We may look at the matter from another angle. If on the inputs the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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