SHANKESHWAR FABRICS PVT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) IN this group of Writ Petitions, the validity and application of the Scheme as modified by the Notification of the Central Government dated 10. 12. 1998 introducing Clause 5 under which the independent processor of proceeded textile fabrics have been denied benefit of utilisation of MODVAT credit, has been challenged.

(2.) THE relevant rules read as under: "in exercise of the powers conferred by sub-section (3) of Section 3a of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby specifies that the rate of excise duty on processed textile fabrics falling under heading Nos. 52. 07, 52. 08, 52. 09, 54. 06, 54. 07, 55. 11, 55. 12, 55. 13 and 55. 14 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), manufactured or produced by an independent processor with the aid of a hot-air stenter shall be. (i) in the case of a processing factory whose average value of processed fabric is upto and including Rs. 30 per s. q. m. 12. 8 per cent, of the capacity of production in value terms per chamber per month, equivalent to Rs. 1. 5 lacs per chamber per month and (ii) in the case of a processing factory whose average value of processed fabric is exceeding Rs. 30 per sq. m. 12. 8 per cent, of the capacity of production in value terms per chamber per month, equivalent to Rs. 2 lacs per chamber per month. . . . . . . . . . 5. Notwithstanding anything contained above, the independent processor of processed textile fabrics shall not be eligible to avail any credit of duty paid on inputs or capital goods under the Central Excise Rules, 1944 or any notification issued thereunder. 6. Nothing contained in this notification shall apply to. (a) any goods manufactured or produced prior to the 16th day of December, 1998 and cleared on or after that date; (b) a composite mill, i. e. , a manufacturer or processor, who is engaged in the processing of fabrics with the aid of power along with the spinning of yarn from fibres and weaving or knitting or crocheting of fabrics within the same factory and includes a multi-locational composite mill, i. e. , a public limited company which is engaged in the processing of fabrics with the aid of power along with the spinning of yarn from fibres and weaving or knitting or crocheting of fabrics in one or more factories owned by the same public limited company. (7) This notification shall come into effect from the 16th day of December, 1998. "

(3.) CONSEQUENTLY, this group of Writ Petitions is allowed and the respondents are directed to allow the petitioners to avail the MODVAT credit earned by them as on 16. 12. 1998. There shall be no order as to costs. .