JUDGMENT

Raju, J.-This Reference under Section 35H of the Central Excises and Salt Act 1944, (hereinafter referred to as the Act ) came to be directly made at the instance of the Revenue to this Court by the Customs, Excise and Gold (Control) Appellate Tribunal, North Regional Bench, on account of conflict of views expressed in the decisions of the High Court of Gujarat reported in Torrent Laboratories Pvt. Ltd. v. Union of India1, and that of the Karnataka High Court reported in Thungabhadra Steel Products Ltd. v. Supdt. of Central Excise2.

2. The factual details necessary to understand and appreciate the disputes between parties may be noticed, before adverting to the area and nature of dispute. The respondent is a holder of licence in Form L-4 and a manufacturer of vegetable products failing under Chapter 15-04 of the Central Excise Tariff, at the relevant point of time. The respondent, admittedly, filed a declaration under Rule 57G of the Central Excises Rules, 1944, (hereinafter referred to as "the Rules"), on 10.3.1987 for adoption of MODVAT Credit in respect of certain inputs used by them in the manufacture of vegetable products and consequently became entitled to avail of t