ASIAN PAINT INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) HEARD. Perused the records. The point which arises for consideration is whether in exercise of powers under Rule 57-A of the Central Excise Rules, 1944, hereinafter referred to as "the said rules" the respondents are entitled to restrict the availability of the credit of duty paid on excisable goods used in the final product as inputs to the exclusion of some of the inputs?

(2.) BY the present petition, the petitioners are challenging the legality and validity of the Notification No. 177/86, dated 1-3-1996, issued under Rule 57-A of the said Rules as being ultra vires the Rule insofar as it seeks to restrict the benefit of the notification to certain inputs listed in Column No. 2 of the table thereunder to the exclusion of other inputs. It is the case of the petitioners that Rule 57-A empowers the Government to issue notification specifying the final products and the duty paid on the inputs used in the manufacture of final product but such power does not include the one to specify certain inputs and to exclude the other inputs. In other words, all the inputs used in or in relation to the manufacture of the final products specified under the notification are necessarily to be eligible to avail the Modvat credit in respect of the duties and therefore the impugned notification, to the extent it restricts the benefit thereunder to certain inputs on which the Modvat credit can be availed, the same is ultra vires the said Rule.

(3.) THE petitioners, therefore, have also challenged the show cause notice dated 2-1-1989 and consequential order of the Collector dated 20-2-1990 under which the petitioners were directed to reverse the Modvat credit to the extent of Rs. 32,44,704. 46 and further imposed penalty of Rs. 5 lakhs.