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Gujarat High Court
Judgename :G.T.Nanavati, J.U.MEHTA
DIPAK VEGETABLE OIL INDUSTRIES LIMITED,manavadar - Appellant
Versus
UNION OF INDIA - Respondent
.
Decided On : 02/05/1990
Constitution Of India – Art. 133 – Central Excise Rules – Sec. AAA – Rules 57k to 57p – Usage of Credit – Writ – Writ Petition – Facts, The petitioners in all these petitions are manufacturers of Vanaspati (hydrogenated vegetable oil) and/or Soap – To encourage use of minor oils, the Central Government introduced a system of rebate in excise duties for Vanaspati and soap linked to larger use of such minor oils – It inserted Sec. AAA containing Rules 57k to 57p in Chapter V of the Central Excise Rules – On that very day the Government also issued under Rule 57k Notification no. 27 and 40 specifying the final products, minor vegetable oils and rates at which credit was to be given for use of such minor oils in manufacture of Vanaspati and Soap, respectively. Notification no. 40 was superseded by Notification No. 192 and the later notification was subsequently amended by Notification No. 17 – Thereafter, they stated informing the petitioners that as both the Notifications were rescinded, they should file fresh classification lists and should not avail of the accumulated credit for payment of excise duty on the manufacture of Vanaspati and Soap – Prayer, As the petitioners were thus forbidden to utilise the credit which they had earned, they have filed these petitions challenging the view taken by the respondents and the directions given on that basis – They want this court to issue a writ of mandamus restraining them from preventing the petitioners from utilising the credit earned by them as a result of use of minor oils in the manufacture of either Vanaspati or Soap – Held, While it is true, that the right to get credit came into existence only on issuance of the aforesaid notifications, on a correct interpretation of Rule 57n read with Rule 57k, it will have to be held that the right to utilise the credit so earned did not come to an end the moment the said notifications were rescinded – In this context it is pertinent to note that only the aforesaid notifications have been rescinded and not Rule 57n which confers a right to utilise the credit already earned – A right conferred by a rule could not have been taken away by the government by merely rescinding the notifications which had brought the said right into existence – The right which the manufacturer had got, no doubt on the issuance of the said notification, was a monetary right and once it got crystalised in terms of money, the same could not have been treated as having come to an end on the day on which the said notifications came to be rescinded – Court, therefore, is of the opinion that even after the aforesaid notifications came to be rescinded, the credit of money which was earned by the manufacturers of Vanaspati and Soap could be utilised by them in terms of the Rules and the notifications for payment of excise duty on Vanaspati and Soap manufactured by them (after the notification were rescinded) – IN the result these petitions are allowed – A writ of mandamus shall issue directing the respondents to permit the petitioners to utilise the credit of money earned by them as a result of purchase of duty paid notified inputs before the notifications in question came to be rescinded for payment of excise duty on manufacture of Vanaspati or Soap, as the case may be – Petitions Allowed
( 1 ) THE petitioners in all these petitions are manufacturers of Vanaspati (hydrogenated vegetable oil) and/or Soap. Till 1-3-1987 the petitioners were manufacturing Vanaspati/soap from conventional oils because they give high process yield and are cost effective compared to nonconventional minor oils like Rice-Bran oil, Mahuva oil, Water Melon Seed oil, Solvent Kardi oil, etc.
( 2 ) IN order to encourage use of minor oils, the Central Government introduced in 1986-87 a system of rebate in excise duties for Vanaspati and soap linked to larger use of such minor oils. It inserted on 1-3-1987 Sec. AAA containing Rules 57k to 57p in Chapter V of the Central Excise Rules. On that very day the Government also issued under Rule 57k Notification no. 27 of 1987 and Notification No. 40 of 1987 specifying the final products, minor vegetable oils and rates at which credit was to be given for use of such minor oils in manufacture of Vanaspati and Soap, respectively. Notification no. 40 of 1987 was superseded by Notification No. 192 of 1987-CE and the later notification was subsequently amended by Notification No. 17 of 1988-CE dated 1-3-1988.
( 3 ) IT is the case of the petitioners that with an intention to avail of the benefits of those Notifications, the petitioners effected changes in their plaints and machinery and stated using specified minor oils. It is also their case, and that is not in dispute, that they were given credit of money for the use of those specified minor oils and were permitted to utilise the same for payment of excise duty on Vanaspati and Soap manufactured by them using such specified minor oils till 25-8-1989. The Central Government on 25-8-1989 withdrew Notifications no. 23 of 1987 and 192 of 1987 by issuing Notification No. 39 of 1989. Though these Notifications were rescinded on 25-8-1989, the subordinate excise officers probably did not not know about the same till 1-9-1989. Thereafter, they stated informing the petitioners that as both the Notifications were rescinded, they should file fresh classification lists and should not avail of the accumulated credit on and from 25-8-1989 for payment of excise duty on the manufacture of Vanaspati and Soap. As the petitioners were thus forbidden to utilise the credit which they had earned before 25-8-1989, they have filed these petitions challenging the view taken by the respondents and the directions given on that basis. They want this court to issue a writ of mandamus restraining them from preventing the petitioners from utilising the credit earned by them as a result of use of minor oils in the manufacture of either Vanaspati or Soap.
( 4 ) THE learned Counsel appearing for the petitioners submitted that the respondents misinterpreting Rules 57k and 57n and the aforesaid Notifications, have taken an erroneous and unreasonable view that on and from 25-8-1989 it was not open to the manufacturers of Vanaspati and Soap to utilise the credit earned by them for payment of excise duty on the manufacture of Vanaspati and Soap, using specified raw oils. He further submitted that the directions given by the respondents to that effect are, therefore, arbitrary, unjust and without authority of law. On the other hand, it was submitted by the learned Counsel appearing for the respondents that by making Rules 57k and 57p and by issuing notifications Nos. 27 and 40 of 1987, on 1-3-1987, no right was conferred on any manufacturer of Vanaspati or Soap using minor raw oils and, therefore, as soon as the said Notifications came to be rescinded, the concession or the exemption which was available to such manufacturers came to an end. He submitted that Rules 57k and 57n could not have operated independently of the notifications and, therefore, as soon as the Notifications ceased to remain in existence, the said two Rules ceased to operate.
( 5 ) IN order to appreciate these rival contentions, it will be necessary to refer to Rules 57k and 57n. For ready reference, they are se
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