Dismissed

India Cements Ltd. Chilamkur Cuddapah v. Commr.of Central Excise Hyd

Telangana HC12 Aug 2014CERC/11/2002

Case brief

AI extract

What is this about?

The Supreme Court dismissed a batch of Central Excise Reference Cases. Ruling that Clause 108 of the Finance Act, 2000, validly denies Modvat credit for high speed diesel oil used in captive power generation with retrospective effect from March 16, 1995. The Court upheld the statutory language over judicial pronouncements allowing such credit.

What the court decided

AI extract

India Cements Ltd. Chilamkur Cuddapah Vs Commr.of… — Writ and Judicial Review | Telangana HC (2014)

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THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE T.SUNIL CHOWDARY

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C.E.R.C. Nos.3,4,5,6,7,8,9 & 10 of 2001 AND C.E.R.C.Nos.11,12 & 13 of 2002

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COMMON ORDER: (Per Hon’ble Sri Justice L.Narasimha Reddy)

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In this batch of Central Excise Reference Cases filed under Section 35H (1) of the Central Excise Act, 1944, the question that arises for consideration is as to whether the petitioner i.e., assessee is entitled to the Modvat credit for the high speed diesel oil used by it for generation of captive power for its cement plant. The Assessing Officer, the appellate Commissioner and the Tribunal took uniform view that the petitioner is not entitled to the Modvat credit. They contend that Section 112 of the Finance Act, 2000 (for short ‘the Act’) is only clarificatory in nature and it does not have any retrospective effect.

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Heard learned counsel for the petitioners and learned counsel for the respondent.

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It is no doubt true that the high speed diesel utilized by the petitioner in generating power can be treated as one of the inputs for manufacture of the end product, viz., cement. However, not every item, which suffered excise duty, which goes into the manufacture of item, would qualify for the Modvat credit. Rule 57-B of the Central Excise Rules, 1944 (for short ‘the Rules’) enlists the goods or items, which qualify for the credit. The high speed diesel oil was never mentioned in the Rule and, by process of interpretation, in certain cases, it was allowed. However, the Act has put an end to the uncertainty.

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The relevant clause of the Act reads as under:

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“Clause 108 – seeks to deny credit of the duty paid on high speed diesel oil when used tin the manufacture of excisable

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goods with retrospective effect from the 16^th day of March, 1995. It was never the legislative intention to permit credit of duty paid on high speed diesel oil. The clause also seeks to validate the action taken in the past on this basis. This amendment has become necessary to overcome certain judicial pronouncements.”

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Clause 108 of the Act, in its legislated form, was challenged in several matters. In Sangam Spinners Ltd. v. Union of India^[1] , the Hon’ble Supreme Court upheld the validity of the Act.

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Hence, the C.E.R.Cs are dismissed and we decline to answer the questions framed therein.

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______________________ L.NARASIMHA REDDY,J

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__________________ T.SUNIL CHOWDARY,J

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12.08.2014 v v

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[1] (2011) 11 Supreme Court Cases 408

India Cements Ltd. Chilamkur Cuddapah v. Commr.of Central Excise Hyd

Case brief

What is this about?

What the court decided

India Cements Ltd. Chilamkur Cuddapah v. Commr.of Central Excise Hyd

Case brief

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What the court decided

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