KONKAN STEEL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS group of three petitions under Article 226 seeks to challenge legality and validity of the order dated 29th August, 1986 passed by the Central Government under Rule 57G(2) of the MODVAT Scheme. The petitioners are manufacturers of steel ingots. The petitioners use waste and scrap of steel as one of the major inputs in the process of manufacturing of steel ingots. Section AA containing Rules 57A to 57I and incorporated in the Rules in 1986 introduced the MODVAT Credit Scheme. Rule 57A enables the Central Government to specify "finished excisable goods" (final products) in the manufacture or in relation to the manufacture of which "goods" specified by the Government (inputs) are used. In respect of such inputs credit of specified excise duty or countervailing duty paid thereon is allowed to be used towards payment of excise duty on the final product subject to the provisions of Section AA and such conditions and restriction as may be specified in the notification. Rule 57C mandates that no credit of the specified duty paid on the specified inputs used in the manufacture of a final product shall be allowed if the final product is exempt from the whole of the excise duty leviable thereon or is chargeable to nil rate of duty Rule 57D provides against denial or variation in credit of duty in respect of inputs contained in waste, refuse or by-product in certain circumstances. Rule 57E deals with manner of utilization of the inputs and the credit. Rule 57G which is material for our purposes prescribes the procedure to be followed by the manufacturer who seeks to avail the benefit of the scheme.

(2.) THE requirements prescribed in sub-rules (1), (2) of Rule 57G and the first proviso are as follows:

(3.) ON 29th August,1986 the impugned order was issued by the Ministry of Finance, Government of India to modify the earlier deemed credit order dated 7th April, 1986 as regards provision for deemed credit in respect of iron and steel waste and scrap. By the said order, the following directions were issued: