2003 (3) TMI 121 - SC - Central Excise

Supreme Court: Manufacturers entitled to credit under Modvat scheme despite rule amendment.

SAMTEL INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR

The Supreme Court held that manufacturers of black and white picture tubes were entitled to credit under the Modvat scheme for duty paid on inputs against ... Interpretation of Rule 57F(17) of the Central Excise Rules, 1944, Held that:- Sub-rule 17(b) is identical to sub-rule 17(a) except that it is in respect of a different final product. Once a validity of a provision is challenged and the validity is upheld by reading down that provision, then it is not necessary that in all subsequent proceedings the validity must again be challenged. It is sufficient if a party claims that the provision has to be read in the manner laid down by a judgment of this Court. In the light of the judgment of this Court in Eicher Motors case (1999 (1) TMI 34 - SUPREME COURT OF INDIA), sub-rule 17 cannot apply to vested rights. Therefore to the extent that the goods have already been exported, prior to March, 1997, the assessee would be entitled to a refund. Issues: Interpretation of Rule 57F(17) of the Central Excise Rules, 1944Analysis:1. The appeals were against the judgments of the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) regarding the interpretation of Rule 57F(17) of the Central Excise Rules, 1944, amended from 1st March, 1997.2. The appellants, manufacturers of black and white picture tubes, exported their products under a bond and had paid duty on the inputs used. They were entitled to credit under the Modvat scheme for duty paid on inputs against duty payable on the final product. The Rule amendment in March 1997 impacted their entitlement to a refund of duty for exports under bond.3. The amended Rule 57F(17) specified that any unutilized credit of duty with manufacturers of certain products, including black and white picture tubes, as of 1st March, 1997, shall lapse and not be allowed for duty payment on any excisable goods, whether for home consumption or export, except for credits in respect of inputs in stock.4. The appellants' claims for refund were rejected based on the amended sub-rule, leading to the dismissal of their appeals by CEGAT. The appellants relied on a previous Supreme Court decision regarding a similar sub-rule to argue for their entitlement to the credit.5. The Supreme Court referred to a previous case where the Court held that the right to credit became absolute when inputs were used in manufacturing, and any subsequent changes should not affect vested rights. The Court emphasized that the amended sub-rule could not apply to goods manufactured before the amendment date.6. The Court rejected the argument that sub-rule 17 was merely a period of limitation, distinguishing it from a previous case where a similar proviso was considered a limitation. The Court set aside the impugned judgments, directing the processing of the appellants' refund claims within three months, emphasizing the protection of vested rights.7. The Court's decision was based on the principle that vested rights should be protected, especially when a previous judgment had interpreted a similar provision in favor of maintaining such rights. The Court emphasized the need to interpret the rule in line with established legal principles to ensure fairness and protection of rights.