ESTER INDUSTRIES LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) The Petitioner has filed the present petition under Article 226 and 227 of the Constitution of India, inter alia, impugning a letter dated 13th July, 2000 issued by Superintendent of Central Excise, Khatima, calling upon the Petitioner to pay back a sum of Rs.1,69,91,809/ -, stated to have been claimed as MODVAT credit under Rule 57A of the Central Excise Rules, 1944 (hereafter 'the Rules'), for the period 16th March, 1995 to 12th May, 2000. The Petitioner also challenges Section 112 of the Finance Act, 2000 as being ultra vires the Constitution of India.

(2.) The Petitioner is a public limited company engaged in the manufacture and sale of Polyester Chips, Polyester Films, Polyester Filament Yarn, etc. The dispute in the present case concerns the denial of MODVAT credit claimed by the Petitioner in respect of the excise duty paid on High Speed Diesel Oil (hereafter 'HSD') which was consumed by the Petitioner for generation of electricity used for the manufacture of excisable goods in its factory.

(3.) It is not in dispute that by virtue of Notification No. 5/98 -C.E. (N.T.) dated 2nd March, 1998 issued by the Central Government, MODVAT Credit on excise duty paid on HSD was inadmissible. The disputes in the present case essentially concern the MODVAT credit which was claimed and allowed to the Assessee for the period 16th March, 1995 till 1st March, 1998. The Petitioner claims MODVAT Credit under Rule 57A of the Rules in respect of HSD consumed as fuel for generation of electricity used for the manufacture of excisable goods with effect from 1st March, 1994. According to the Petitioner, MODVAT Credit was available in respect of duties paid on 'inputs' used for the manufacture of excisable goods and, HSD was one such input in respect of which MODVAT credit was available in terms of Notification No. 4/94 -C.E. (N.T.) dated 1st March, 1994.