2016 (7) TMI 1065

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....2 of the Central Excise Tariff. The respondent acquired capital goods and took Modvat credit of the duty paid thereon under Rule 57Q of the Erstwhile Central Excise Rules on 30/07/1997. W.e.f. 01/8/1997 a new scheme for payment of duty on certain goods covered by Chapter 72 was introduced under Section 3A of the Central Excise Act. W.e.f. same date, vide Notifications 33/1997 and 34/1997-CE (NT), Rule 57S was amended which provided for lapsing of any Modvat credit availed under Rule 57Q (3) and lying unutilized on the said date. As on 31/7/1997, the respondent's account was showing an utilized balance of about Rs. 20 lakhs which would lapse w.e.f. 01/8/1997 in terms of the notifications, mentioned above. 3.  The respondent challen....

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....t, the duty was to be paid in cash and the benefit of Modvat was not at all available to the Assessee on any inputs/capital goods and, hence, is outside the purview of Modvat scheme. 5.  We have heard Ms. Kanu Verma, learned DR for the Revenue and Shri K.K. Anand, learned Advocate for the respondent. The learned DR submitted that both the authorities below have wrongly applied the principles of res-judicata and that in as much as the Notifications 33/1997 and 34/1997-CE (NT) both dated 01/8/1997, were in force and has never been quashed or declared ultravires by any Court, the orders of the authorities below deserve to be quashed. The learned Advocate Shri K.K. Anand, appearing for the respondent argued that in as much as the authorit....

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.... finished products lying in stock on 16/3/1995 was allowed. The Apex court held in para 5 as follows .  "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 taxes,....." . 8.      The Apex Court further held in para 6 that : "If on the inputs the assessee had already paid the taxes on the basis that when the goods are utilized 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....