2004 (12) TMI 95 - SC - Central Excise

Supreme Court clarifies tax credit eligibility, overturns penalty, and restores Assessing Commissioner's decision.

COMMR. OF C. EX., HYDERABAD Versus ASSOCIATED CEMENT COMPANIES LTD.

The Supreme Court reviewed a case involving the interpretation of Section 112 of the Finance Act, 2000 regarding credit of duty on high-speed diesel oil. ... Whether the assessee was entitled to get the benefit of the Notification till Rule 57B was amended? Held that:- A bare reading of sub-section (1) of Section 112 shows that no credit is admissible on any duty paid on high speed diesel oil at any time during the period commencing on and from the 16th day of March, 1995 and ending with the day the Finance Act, 2000 received the assent of the President. The President gave assent on 1st April, 2000. It is not in dispute that the period in question comes under the purview of Section 112(1). The contention that Rule 57B was not amended is of no avail since the aforesaid provision provides that notwithstanding anything contained in Rules, the credit is not admissible. As Section 112 was not brought to the notice of the Court, the appeal of the Revenue was dismissed. In view of this statutory provision, the appeal of the Revenue could not have been dismissed since the assessee was not entitled to get the benefit of Rule 57B. Though the assessee is not entitled to the benefit as aforesaid, yet we cannot ignore the fact that the aforesaid amendment came into force on 1st April, 2000 when the order of the tribunal dated 8th September, 1999, in favour of the assessee was holding the field and it is being set aside today by this order. In this view, the time to make payment under Section 112(2)(b) has to commence only from today. Further, having regard to the facts and circumstances of the case, it would be appropriate to set aside the penalty of Rs. 50,000/- imposed on the assessee by Assistant Commissioner in order dated 22nd September, 1998. Thus we allow the Review Petition. Issues Involved:Review of order dated 28th November, 2002 in Civil Appeal No. 2355 of 2000.Interpretation of Section 112 of the Finance Act, 2000 regarding credit of duty on high speed diesel oil.Validity of the benefit of Rule 57B in light of Section 112.Setting aside penalty imposed on the assessee.Constitutional validity challenge of Section 112.Analysis:The Supreme Court reviewed a petition filed by the Commissioner of Central Excise challenging an order in Civil Appeal No. 2355 of 2000. The appeal concerned the availability of Modvat credit for high-speed diesel oil used for generating electricity for a cement plant. The Tribunal had allowed the appeal, granting the assessee the benefit of the Notification until Rule 57B was amended.The Commissioner highlighted Section 112 of the Finance Act, 2000, which validated the denial of credit of duty paid on high-speed diesel oil during a specific period. The Court noted that no credit was admissible for duty paid on high-speed diesel oil from March 16, 1995, until the Finance Act, 2000 received presidential assent on April 1, 2000. Despite the Tribunal's previous decision, the statutory provision of Section 112 rendered the assessee ineligible for the benefit of Rule 57B.Acknowledging the retrospective effect of Section 112, the Court set aside the Tribunal's order in favor of the assessee. The time for payment under Section 112(2)(b) was deemed to commence from the date of the Court's decision. Additionally, the Court deemed it appropriate to revoke the penalty of Rs. 50,000 imposed on the assessee by the Assistant Commissioner.The Court declined to entertain a challenge to the constitutional validity of Section 112 in this appeal, indicating that such issues could be addressed through a separate petition. Consequently, the Review Petition was allowed, the order dated 28th November, 2002 was recalled, and Civil Appeal No. 2355 of 2000 was allowed. The Tribunal's order from 8th September, 1999 was set aside, restoring the Assessing Commissioner's decision, subject to the direction regarding the penalty and payment of interest.