TMI Blog1999 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. Allow the petitions filed by the assessees and declare that the said rule cannot be applied except in the manner indicated by us . - 7 & 8 of 1998 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in balance with the assessee as on 16-3-1995 represents a vested right accrued or acquired by the assessee under the existing law and such right is sought to be taken away by impugned Rule 57F(4A) and the Central Government has no powers under Section 37 of the Central Excise Act, 1944 [hereinafter referred to as 'the Act'] or any other provision thereof to frame such a rule. 2. The impugned rule is arbitrary and unreasonable as the same has been framed without due application of mind to the relevant facts and it has been exercised on the basis of non-existent facts or which are patently erroneous. 3. Section 37 of the Act does not enable the Central Government to frame a rule enabling the lapsing of the balance in Modvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme inasmuch as, if the benefit of concession had been extended, though on the original item manufactured, a duty was liable to be paid and the ultimate product remains a duty free product and thus led to a situation where on the item originally manufactured which was used as an input was paid only in order to avoid payment of duty on the ultimate goods manufactured by them. In the original scheme introduced there was a nexus between the input and the output but the result of the application of that scheme led to a situation where such nexus was lost between the input and the output leading to a anomalous situation pointed out above. It is, therefore, submitted that it was permissible for the authorities to frame the rule in question which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs gets fully utilised and some amount has to be paid by the manufacturer by way of cash. Prior to 1995-96 Budget, the excise duty on inputs used in the manufacture of tractors, commercial vehicles varied from 15% to 25%, whereas the final products were attracted excise duty of 10% or 15% only. The value addition was also not of such a magnitude that the excise duty required to be paid on final products could have exceeded the total input credit allowed. Since the excess credit could not have been utilised for payment of the excise duty on any other product, the unutilised credit was getting accumulated. The stand of the assessees is that they have utilised the facility of paying excise duty on the inputs and carried the credit towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrued to a party such as availability of a scheme, is affected and, in particular, it loses sight of the fact that provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assessees concerned. Therefore, the scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier scheme was applied under which the assessees had availed of the credit facility for payment of taxes. It is on the basis of the earlier scheme necessarily the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said rule would result in affecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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