MIDLAND PLASTICS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) BEING aggrieved by rejection of the petitioner's claim for grant of interest on delay in refund of Modvat credit amount allowed to the tune of rs. 29,03,971/-, petitioner has filed this petition.

(2.) PETITIONER is a company incorporated and registered under the provisions of Companies Act having its registered office at industrial area malanpur, Distt. Bhind and factory also in the same premises. It is stated that the establishment of the petitioner is engaged in manufacturing and sale of woven sacks made out of high density polyethylene/polypropylene (HDPE/pp ). The aforesaid item is said to be important packing material. It is stated that the petitioner is exporting the material manufactured and is earning substantial foreign exchange for the country. According to the petitioner the product in question is classified under Chapter 39 (Plastics and Articles) as per schedule to the Central Excise Tariff Act, 1985 and are chargeable to Central Excise accordingly. Govt. of India had introduced the Modvat (Modified Value Added tax Scheme) with effect from 1-3-86 thereby allowing certain benefits for duty paid on inputs for discharging Central Excise duty on the final product in the manufacture of which the said inputs are used. Government was empowered to issue notification in this regard under Rule 57-A of Central Excise Rules, 1944 for specifying the inputs and final product on which the scheme of Modvat was applicable.

(3.) IT is the case of the petitioner that from time to time various notification have been issued enlarging the scope of Modvat Scheme. When the new tariff came into force with effect from 1-3-86, the goods manufactured by the petitioner namely HDPE/pp tapes, fabrics and sacks were classified under chapters 54 and 63 i. e. , Textiles and Textile Articles and since these products were not specified in the notification issued under Rule 57-A of the Central excise Rules, petitioner was not entitled to avail of the Modvat credit. However, it was the case of the petitioner that the product in question should be classified under the category of plastic and thereafter admitted to benefit under the modvat Scheme. Petitioner, therefore, approached this Court and this Court vide order dated 18-2-93 direct respondent No. 2 to approve classification of the items manufactured by the petitioner under Chapter 39 i. e. , the classified category of plastics. Since the aforesaid item was classified in the notification issued under Rule 57-A, Modvat Scheme became available to the petitioner and, therefore, in consequence to the order passed on 18-2-93 by this Court, petitioner became entitled to benefit under the Modvat Scheme whereby the duty paid on inputs used in relation to the manufacture of final products was available as credit for the purpose of discharging duty on the clearance of the goods in question.