TaxTMI 
TaxTMI 
2011 (3) TMI 4
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 Corporation Ltd./Hindustan Petroleum Corporation Ltd. through their sales office/depots in Rajasthan, which was cleared under heading 27.10 (sub heading 2710.90) on payment of central excise duty. In Civil Appeal No. 477-478 of 2003: The appellants are engaged in the business of manufacturing and selling Portland cement 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 Corporation Ltd./Hindustan Petroleum Corporation Ltd. through their sales office/depots in Rajasthan, which was cleared under heading 27.10 (sub heading 2710.90) on payment of central excise duty. In Civil Appeal No. 479 of 2003: The appellants are engaged in the business of manufacturing and selling Cotton Yarn and Yarn of Synthetic/Artificial Staple Fiber and have in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. 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 duty on manufactured goods other than salt. Rule 43 to Rule 57 under Section A of Chapter V provides the general provisions. Rule 57 speaks of finances and penalties. Rule 57A provides for availment of MODVAT credit in respect of inputs used in manufacture of the finished product. The rule empowers the Central Government to specify the final product by issuing notifications in the official gazette for the purpose of allowing MODVAT credit of any duty of excise paid on the goods i.e. inputs used in the manufacture of the said final products. 9. Learned counsel appearing for the parties also drew our attention to various notifications issued by the Government of India which are relevant for the purpose of deciding the present case and also to various decisions to which reference shall be made during the course of our discussion. 10. Learned counsel appearing for the appellants submitted that the High Court in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 claimed by the appellants and a Finance Bill was introduced justifying the action taken to deny the credit of any duty paid on the HSD oil from 16.3.1995. In fact the explanatory note is not issued to signify any legislative change but the same was issued in order to explain the real position as existing by issuing an Act by way of Finance Bill 2000 and thereafter the Finance Act, 2000 which was passed by the Parliament and received the assent of the Parliament on 12.5.2000. 13. In the context of the aforesaid submissions of the counsel appearing for the parties, we proceed to deal with the issues raised before us more elaborately. However, in order to effectively deal with and understand the implications and ambit of the issues raised it may be necessary to set out the various relevant provisions of the Central Excise Act, 1944 [for short "the Act"], and the Rules framed thereunder and also the various notificat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 mentioned that the final product, Man Made PV Blended Yarn falling under Chapter 55 of the Central Excise Tariff Act, 1985 was also specifically excluded. 19. The aforesaid notification was issued in exercise of the powers conferred by Rule 57A of the Central Excise Rules, 1944. By issuing the said notification the Central Government identified the inputs in respect of which duty paid was allowed as credit if they were used in relation to the manufacture of the final products which were also specified in the notification as indicated hereinbefore. The high speed diesel oil and the final product of the Man Made PV Blended Yarn falling under Chapter 55 of the Central Excise Tariff Act, 1985 were specifically excluded from the list of eligible inputs. 20. The aforesaid notification came to be amended specifically by issuing Notification No. 8/95-CE(NT) dated 16.03.1995, whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 goods:- (1) Notwithstanding anything contained in Rule 57A, the manufacturer of final products shall be allowed to take credit of the specified duty paid on the following goods, used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in the final products or not, namely,:- (i) goods which are manufactured and used within the factory of production; (ii) paints; (iii) goods used as fuel; (iv) goods used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production. xxxxxxxxxxxxxxxxxxxxxxxxxx" 26. On 10.03.1997, a Notification No. B42/1/97 was issued in the nature of corrigendum whereby in Rule 57B in sub-rule (1) for "goods" wherever it occurs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Tribunal held otherwise, therefore, there was a necessity for the Finance Act to be brought in whereby a clarificatory explanation to the legal position was laid down. 33. Despite the aforesaid two decisions of this court laying down the proposition, it must be clarified that in those decisions validity of Section 112 of the Finance Act was not challenged and therefore this Court did not have the opportunity to examine all the aspects of Section 112. 34. In the case of Tata Motors Ltd. vs. State of Maharashtra reported in (2004) 5 SCC 783, this Court observed that retrospective withdrawal of the benefit of set-off only for a particular period should be justified on some tangible and rational ground when challenged on the ground of uncon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....clusion 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 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 ast April, 2000. 38. Despite the aforesaid fact, since the Tribunal held otherwise, therefore, there was a necessity for the Finance Act to be brought in giving a clarificatory explanation to the legal position which is being prevailing all alone and established by the long list of the notifications which were issued from time to time and referred to hereinbefore. 39. We may also appropriately refer to at this stage to the decision of this Court in Shri Prithvi Cotton Mills Ltd. and Another vs. Broach Borough Municipality and Ors. reported in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 in D.G. Gose and Co. (Agents) Pvt. Ltd. vs. State of Kerala and Anr. reported in (1980) 2 SCC410. In paragraph 14 of the said judgment, this Court stated thus:- "14. Craies on Statute Law, seventh Edn., has stated the meaning of "retrospective" at p. 367 as follows: "A statute is to be deemed to be retrospective, which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past. But a statute Is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing'." It h....