Holding

Accrued credit does not lapse upon rescission of the notification and may be utilised, but credits under two different notifications cannot be claimed simultaneously for the same transaction; the Rs 1000 per tonne ceiling applies to any utilisation.

Summary

Tungabhadra Indus Ltd., a manufacturer of hydrogenated oil, had accumulated money credit under two separate Central Excise notifications – one issued in 1987 and later rescinded, and another issued in 1989. The company claimed it could utilise the credits from both notifications simultaneously for payment of excise duty on a single clearance, subject to the statutory ceiling of Rs 1000 per tonne. The Excise authorities allowed the use of credit but limited each clearance to the Rs 1000 per tonne ceiling and refused simultaneous utilisation of both credits. The High Court dismissed the writ petition, and the Supreme Court was asked to decide whether (i) credit accrued under a rescinded notification survives rescission, and (ii) both sets of credit can be applied together for the same transaction. The Court held that accrued credit does not lapse on rescission and may be used, but the credit from the two notifications cannot be claimed together for a single clearance; the Rs 1000 per tonne limit applies to any utilisation, so only one set of credit may be used per transaction. Consequently, the appeal was dismissed.

Issues considered

The credit of money accumulated under a notification that has been rescinded remains available for utilisation.
The assessee may or may not utilise credits accumulated under two different notifications simultaneously for payment of excise duty on a single clearance, subject to the Rs 1000 per tonne limit.

Legislation cited

Central Excise Rules, 1944s. Rule 57F(4A), s. Rule 57K, s. Rule 57N, s. Rule 57O, s. Section AAA of Chapter V
Central Excise Tariff Act, 1985

Subjects

Excise dutyMoney credit schemeRule 57KCredit utilisationRescinded notificationLimit per tonneSimultaneous creditHydrogenated oil

Judgment

· TUNGABHADRAINDUS. LTD. A
v.
UNION OF INDIA AND ORS.

MAYS, 2000

[G.B. PATTANAIK, DORAISWAMY RAJU AND S.N. VARIAVA, JJ.] B

Excise Laws :
Central Excise Rules, 1944 Chapter AAA Rules 57-K, 57-N & 57-0.
Excise-Money Credit Scheme-Notification allowing credit of money-Noti-
fication further providing utilisation of credit towards payment of duty on final c
product-Notification rescinded-Subsequent notification issued-Both notifi-
cations providing maximum limit of utilisation ofcredit ofRupees one thousand
per tonne-Assessee accumulating credits under both notification-Assessee
seeking adjustment of credit simultaneously towards part payment of duty-
Wlzether pennissible-Held, accumulated credit will not ipso facto exhaust/ D
lapse on rescission of notification-Utilisation of credit accumulated shall be
subject to tenns and conditions contained in notification-Under the facts,
manufacturer not entitled to advantages ofboth notifications simultaneously in
respect of one transaction for payment of duty.
Central Government issued notification under Rule 57-K of the Cen- E
tral Excise Rules, 1944 allowing credit of money in respect of vegetable oil
subject to hydrogenation and further provided utilisation of said credit for
payment of duty on final product subject to maximum limit of Rupees one
thousand per tonne. The said notification was subsequently rescinded.
Thereafter, another notification was issued providing similar credit for
manufacture of same final product. F
Appellant-assessee filed reference before Excise authorities claiming
utilisation of credit under both Notification towards payment of excise
duty on final product. The said reference was disposed by holding that
assessee-appellant is entitled to appropriate credit available to him under
both the notifications but not simultaneously and the credit utilised for G
payment of duty on manufactured product should not exceed Rupees one
thousand per tonne. Notice was issued to appellant for recovery of excise
duty. Appellant filed writ petition seeking stay of recovery contemplated
under said Notice which was dismissed by High Court on the ground that
identical question in another writ petition was answered against assessee. H
1067
~ ,_
I~ '.

Ii
1068 SUPREME COURT REPORTS [2000] 3 S.C.R.
A Hence this appeai by the assessee. ~

Appellant-assessee contended that accumulated credits under two
different notifications could be availed simultaneously by assessee for_pay-
ment of duty on manufactured goods and condition in notification provid-
ing that amount of credit utilised should not exceed Rupees one thousand
B per tonne shall not operate.
Respondent contended that accumulated credit in favour of assessee
under old notification could be utilised subject to conditions mentioned ~
therein and therefore, assessee cannot utilise accumulated credit under
both notification simultaneously.
c Dismissing the appeal, the Court
HELD : 1. Rule 57-K(l) of the Central Excise Rules, 1944 itself
stipulates accumulation of credit of money for use of inputs in the manu-
racture of final products can be availed or only, when a notification is
issued by the Central Government and that notification itself would pro-
D
vide the rates at which credit could be accumulated and also allowing such
credit to be utilised for payment or duty on the final products and this must
be subject to the conditions, if any, stipulated in the very notification itself.
In the aforesaid scheme of the provision, the notification issued by the
Central Government in exercise of powers conferred under Rule 57-K, . ..,.._
E plays an important role. Paragraph (iii) of the Notification issued in the
year 1987 unequivocally, provides that the amount of credit utilised for
payment of duty shall not exceed Rs. 1000 per tonne of vegetable products
on any individual clearance. It is thus clear that credits ma>! be accumu-
lated in favour of a manufacturer of vegetable products, pursuant to the
F notification on the basis of rates provided in the notification on the inputs
and that credit could be utilised for payment of duty while clearing the
final product and the accumulated credit will not ipso facto get exhausted
or lapsed on the rescinding or the notification issued under Rule 57-K of
the Rules and therefore, notwithstanding the rescinding of the notifica-
tion issued in the year 1987 by the notification dated 25th or ~ugust, 1989,
G a manufacturer would continue to utilise the credit accumulated in his
favour for payment of duty, even after the recession of the notification,
~
but subject to the provision, contained in Clause (iii) of the notification,
which granted the accumulation of credit and utilisation of
the same for payment of duty. When a fresh notification dated 11th of
H October, 1989 was issued, certainly the manufacturer would be entitled
TUNGABHADRA INDUS. LTD. v. U.O.I. [PATTANAIK, J.] 1069

_.,, to accumulate credits on the basis of the said notification and would also be
entitled to utilise the same for payment of duty on the final products, but
A

even under that notification, the similar provision as in the earlier one,
namely clause (iii) is there, indicating, that the quantity of credit utilised
for payment of duty on any individual clearance of the final products shall
not exceed rupees ?ne thousand per tonne of vegetable products cleared. B
Clause (iii) of both the notifications, clearly provides that the amount of
credit utilised for payment of duty shall not exceed rupees one thousand
per tonne of vegetable products on any individual clearance. When the
credits get accumulated in accordance with the rates indicated in the
notification itself then the same can be utilised also in accordance with the
terms and conditions contained in that notification. This being the posi- c
tion, a manufacturer would not be· entitled to the advantages of both the
notifications simultaneously in respect of one transaction for payment of
duty, while clearing the transaction in question. [1077-H; 1078-A-F]

Union of India v. Modem Mills Ltd., (1994) 72 E.L.T. 246 (Kar.),
approved. D

Dipak Vegetable Oil Industries Ltd. v. Union of India, (1991) 52 E.L.T.
222 (Guj.) and Agarwal Industries Ltd. v. Union of India, (1992) 57 E.L.T.
561 (A.P.), distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4668 of 1999. E
From the Judgment and Order dated 11.8.98 of the And.bra Pradesh
High Court in W.P. No. 4059 of 1994.

Joseph Vellapally, Dushyant A. Dave, K.J. John, P. Venugopal, P.S.
Sudheer, Siddhartha Dave and Harish Beeran for the Appellant.
F
T.L.V. Iyer, M. Gaurishankar Murthy, Ms. Nisha Bachi and P.
l Parmeshwaran for the Respondents.

The Judgment of the Court was delivered by

PATTANAIK, J. This appeal is directed against the Division Bench G
Judgment of And.bra Pradesh High Court in Writ Petition No. 4059 of 1994,
wherein. following the earlier judgment of the said Court in Writ Petition
"1 No.11311 of 1991, the High Court dismissed the writ petition.

The appellant is the manufacturer of hydrogenated oil. The appellant
filed a Reference before the Assistant Collector, Central Excise, KwnooJ, H
+-
1070 SUPREME COURT REPORTS [2000] 3 S.C.R.
A claimit.1g that they would be entitled to utilise the accumulated credit, avail-
able to them under the Money Credit Scheme, as per Rule 57K of the Central
Excise Rules, 1944 (hereinafter referred to as 'the rules'), at the time of
rescinding of the Notification No. 27/87 as well as the credit available to them
~
-
under Notification dated 11th October, 1989, issued by the Central Govern-
ment under Rule 57K of the Rules. The Assistant Collector disposed of the
B
said Reference by his order dated 9.10.91, holding that the assessee-appellant
is entitled to appropriate the credit available to him on the date of recession
of the Notification of 1987, which stood rescinded on 25th of August, 1989
as well as the credit which gets accumulated, pursuant to Notification dated
11th of October, 1989, but not entitled to utilise the credit available under
c both the Notifications simultaneously and, therefore, the credit would be
utilised for payment of duty on the manufactured product, which should not
exceed Rupees one thousand per M.T. It is because of this order, the appellant
filed the writ petition in the High Court' of Andhra Pradesh to stay the
r~covery of excise duty contemplated under Notice dated 14.10.98 issued by
D the Superintendent of Central Excise, Kumool. The identical question raised
by the appellant in the writ petition filed before the Andhra Pradesh having
been answered against the assessee in another writ petition, which stood
disposed of on 28.4.98, the present writ petition by the appellant also stood
dismissed. Be it be stated that in disposing of writ petition No.11311 of 1991
on 28.4.98, the High Court also came. to the conclusion that the assessee is
.....
E
not entitled to adjust the available credits under Notification of the year 1987 )>-
>
as well as the Notification of the year 1989, simultaneously, and therefore,
there has been no illegality committed by the Excise Authorities. The question
for consideration, therefore is whether an assessee like the appellant, who
..
accumulated credits to his accounts on account of the incentive Notification
F issued by the Central Government in exercise of powers conferred under Rule
57K of the Rules by the date of the recession of the said notification on 25th
_,..
August, 1989 can make adjustment towards payment of duty in addition to
the credits earned, pursuant to Notification dated 11th of October, 1989
simultaneously.
G
Under the Rules, more particularly, Rule 57K, the Central Government
is empowered by Notification in the Official Gazette to allow credit of money
in respect of certain raw materials used in the manufacture of certain excisable
goods. The Notification required to be issued under sub-Rule (1) of Rule 57K
...
H must specify the finished excisable goods to which the provisions of the
TUNGABHADRA INDUS. LTD. v. U.0.1. [PATTANAIK, J.] 1071
sections would apply as well as the rates at which the credit of money is to A
be given for the use of such inputs in the manufacture of final products. Under
Rule 57N the credit of money allowed in respect of any inputs pursuant to
notification issued under Rule 57K would be utilised towards the payment
of duty of excise on the} final products in relation to manufacture of which
such inputs are intende~ to be used in accordance with the declaration filed B
under Rule 57-0. Rule 57-0 provides the procedure to be observed by the
manufacturer. In accordane<e with the provisions contained in Rule 57K, the
Central Government issued the Notification dated 20.3.1987, which is ex-
tracted herein below in extenso for better appreciation of the point in issue
in this case:
c
"Notification No.27/87-CE., dated 1.3.1987 as amended by Notifica-
tion No. 99/87-C.E., dated 20.3.1987;No.17/88-CE dated 1.3.1998
and No.295/88-CE dated 16.12.1988.

Set-off of duty on use of specified minor oils in the manufacture D
of vegetable products. In exercise of the power conferred by rule 57K
of the Central Excise Rules, 1944, the Central Government hereby
specifies:-

(i) the inputs, namely, fixed vegetable oils of the description E
in column (2) of the Table hereto annexed and used in the
manufacture of the final products, namely vegetable
products falling under sub-heading No. 1504.00 of
the Schedule to the Central Excise Tariff Act, 1985 (5of1986);
and
F
(ii) the rates in the corresponding entiy in column (3) of the said
Table as the rate at which credit may be granted for use of such
inputs in the manufacture of the said final products, for the
purpose of Section AAA of Chapter V of the said rules and
stipulates that the grant of credit and utilisation thereof shall in G
addition to the provisions of the said Section, be subject to the
following conditions, namely:-

(i) the credit shall be taken only in respect of the quantity of oil
subjected to hydrogenation on or after the 1st day of March, H
1072 SUPREME COURT REPORTS [2000) 3 S.C.R.
A 1987 for the manufacture of the said final products and the
credit shall be taken only on the date on which the oils has been
so hydrogenated;

(ii) the credit taken during any calender month shall be utilised for
payment of duty on the said final products only after the
B commencement of the succeeding month;

(iii) the amount of credit utilised for payment of duty on any
individual clearance of the said final products shall no.t exceed
rupees one thousand per tonne of vegetable products cleared
c and the excess credit, if any, available in the credit account stlall
not be refunded to the manufacturer or adjusted against\ or
utilised for payment of duty on any other excisable goods under
any circumstances;

(iv) where the description in column (2) of the Table specifies
D solvent extracted variety of the oil, the manufacturer shall
within 5 months from the date of taking credit, or such extended
period as the Assistant Collector of Central Excise may allow
in this behalf, produce a certificate from an officer not below
the rank of Deputy Director in the Directorate of Vanaspati
E Vegetable, Vegetable oils and Fats in Ministry of Food and Civil
Supplies of the Government of India to the effect that the said
Oil has been manufactured by the solvent extraction method;
and

(v) the credit shall be taken only in respect of indigenous inputs and
F
"'
the manufacturer shall produce such documents as may be
required by the Assistant ~ollector of Central Excise in this
regard.

Provided that in the case of palm oil used as input the manufac-
turer shall within 5 months from the date of taking credit or within
G such extended period as the Assistant Collector of Central Excise will
allow in this behalf, produce a certificate from an officer not below
the rank of Deputy Director in the Directorate of Vanaspati, Vegetable
Oils and Fats in the Ministry of Food and Civil Supplies of the
Government of India to the effect that the said oil has been of
H indigenous origin.
TUNGABHADRA JNDUS. LTD. v. U.0.1. [PATTANAIK, J.] 1073
TABLE A

S.No. Fixed Vegetable Oils Rate of credit per tonne of
the fixed vegetable oil
--------------------------------------------------------------------------------------
(1) (2) (3)
B
01. Rice bran Oil Rs. 6000
....
02. Mehuwe Oil Rs. 6500
03. Water Melon Seed Oil Rs. 6500
04. Solvent extracted cotton Seed oil Rs. 4000 c
05. Solvent extracted mustard oil Rs. 3250
06. Solvent extracted rape seed oil Rs. 3250
07. Solvent extracted sunflower oil Rs. 3250
08. Solvent extracted Safflower oil Rs. 3250 D
09. Palm Oil Rs. 3250

Explanation - In this notification, "Vegetable products" means any
vegetable oils or for which, whether by itself or in admixture with any
other substance, has by hydrogenation or by any other process, been E
hardened for human consumption."

This notification stood rescinded by the subsequent Notification dated 25th
of August, 1989. Shortly, thereafter, a fresh notification was issued on 11th
of October,1989 by the Central Government in exercise of the same power
conferred under Rule 57K of the Rules, providing the credit in respect of the F
quantity of oil subjected to hydrogenation on or after 11th of October, 1989
for the manufacture of the same final product and it was stipulated that the
credit could be taken only on the date on which the oil has been so
hydrogenated. The aforesaid Notification dated 11th October, 1989 is quoted
herein below in extenso:
G
Government of India
Ministry of Finance
(Department of Revenue)

New Delhi, dated the 11th October, 1989. H
1074 SUPREME COURT REPORTS [2000] 3 S.C.R.
~ ,_.
A NOIIFICAIION
No.45/89 - Central Excise (N.T.)

GSR (E) :- In exercise of the powers conferred by rule 57K of the
Central Excise Rules, 1944, the Central Government hereby specifies:

B (i) the input; namely, fixed vegetable oils of the description in
colurnn(2) of the Table hereto annexed and used in the manu-
facture of the final products, namely, vegetable products falling
under sub-heading No. 1504.00 of the Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986); and
c (ii) the rates in the corresponding entry in column (3) of the said
Table as the rate at which credit may be granted for use of such
inputs in the manufacture of the said final products,

For the purpose of Section AAA of Chapter V of the said
D Rules and stipulates that the grant of credit and utilisation
thereof shall, in addition to the provisions of the said Section,
be subject to the following conditions namely:

(i) the credit shall be taken only in respect of the quantity of oil
subjected to hydrogenation on or after the eleventh day of
E October, 1989 for the manufacture of the said final products and
the credit shall be taken only on the date on which the oil has
been so hydrogenated;

(ii) the credit taken during any calender month shall be utilised for
payment of duty on the said final products only after the
F commencement of the succeeding month;

(iii) the quantity of credit utilised for payment of duty on any
individual clearance of the said final products shall not exceed
rupees one thousand per tonne of vegetable products cleared
and the excess credit, if any, available in the credit account shall
G
.not be refunded to the manufacturer or adjusted against or
~
. utilised for payment of duty on any excisable goods under any
other circumstances;

(iv) where the description in column(s) of the Table specifies
H solvent extracted variety of the oil, the manufacturer shall
TUNGABHADRA INDUS. LTD. v. U.0.1. [PATTANAIK, J.] 1075
within five months from the date of talcing credit or such A
extended period as the Assistant Collector of Central Excise
may allow in this behalf, produce a certificate from an officer
not below the rank of Deputy Director in the Directorate of
Vanaspati, Vegetable oils and Fats in the Ministry of Food and
Civil Supplies of the Government of India to the effect that the B
said oil has been manufactured by the solvent extraction method;
and

(v) the credit shall be taken only in respect of indigenous inputs and
the manufacturer shall produce such documents as may be
required by the Assistant Collector of Central Excise in this C
regard;

Provided that in the case of Palm Oil used as input the manufac-
turer shall within five months from the date of talcing credit, or within
such extended period as the Assistant Collector of Central Excise will
allow in this behalf, produce a certificate from an officer not below D
the rank of Deputy Director in the Directorate of Vanaspati Vegetable
Oils and Fats in the Ministry of Food and Civil Supplies of the
Government of India to the effect that the said oil has been of
indigenous original,
E
TABLE

S.No. Fixed Vegetable Oils Rate of credit per tonne of
the fixed vegetable oil
--------------------------------------------------------------------------------------
01. Ricebran Oil Rs. 5000 F
02. Mahuwa Oil Rs. 6500
03. Water Melon seed Oil Rs. 6500
',.
04. Solvent extracted cotton seed Oil Rs. 4000
05. Solvent extracted mustard Oil Rs. 3250 G
.., Solvent extracted repeseed Oil Rs. 3250
06.
07. Solvent extracted sunflower Oil Rs. 3250
08. Solvent extracted safflower Oil Rs. 3250
09. Palm Oil Rs. 3250 H
1076 SUPREME COURT REPORTS (2000] 3 S.C.R.
A Explanation - In this notification "Vegetable Product" means any
vegetable oil or which, whether by itself or in admixture with any
other substance, has by hydrogenation or by any other process, been
hardened for human consumption."

Mr. Dushyant A. Dave, the learned senior counsel, appearing for the
B
appellant contended before us that an assessee, who has earned the credit
pursuant to notification, is entitled to get the same adjusted towards the
payment of duty of excise on the final products notwithstanding the recession
of the notification under which the credits stood accumulated in favour of
an assessee. According to the learned counsel, this being the position, when
c the same assessee earns further credits pursuant to a fresh notification, issued
by the Government under Rule 57K, he will be entitled to utilise, both, the
credits accumulated in favour of the assessee towards payment of duty of
excise on the final products and as such the excise authorities committed error
in allowing adjustment only to the extent of Rs.1000 per M.T. and refusing
D the adjustment of both the credits accumulated simultaneously. In support of
this contention, reliance was placed on the decision of the Gujarat High Court
in the case of Dipak Vegetable Oil Industries ud. v. Union of India, (1991)
52 E.L.T. 222 (Guj.), as well as the decision of Andhra Pradesh High Court
in the case of Agarwal Industries ud. v. Union of India, (1992) 57 E.L.T.
E 561 (A.P.). The learned counsel also contended that against the decision of
the Gujarat High Court an SLP has been filed in this Court, which SLP stood
dismissed and such dismissal tantamounts to confirmation of the view taken
by the Gujarat High Court by this Court. The said order of dismissal has been·
reported in 1998 (100) E.L.T. Page A-175. Mr. Dave also contended that
under the Modvat Scheme, a rule had been introduced to Rule 57F, which
F is read as Rule 57F(4A), which rule stipulated that any credit of specified
duty lying unutilised on 16th of March, 1995 with a manufacturer of tractor,
would lapse and shall not be allowed to be utilised for payment of duty of
any excisable goods and this Court in the case of Eicher Motors l.Jd. v. Union
of India, (1999) 106 E.L.T. 3 (SC), came to the conclusion that a right which
G had been accrued to a party under any available scheme cannot be affected
by any subsequent Rule or Notification and the assessee would be entitled
to avail of the credit which had not been utilised on the date, Rule 4A came
into existence. Mi-. Dave contends that though this decision is not of direct
application but the principle enunciated therein should be made applicable
H and the appellant should be permitted to utilise the credit of money already
TUNGABHADRA INDUS. LTD. v. U.O.I. [PATTANAIK, J.] 1077
...... :J accrued in respect of the inputs prior to the rescinding of the notification in A
paying of the duty of excise leviable on the final product. Mr. Dave also
referred to the speech of the Finance Minister and pressed the same in support
of his contention.

Mr. T.L.V. Iyer, the learned senior counsel, appearing for the Union of
India did not dispute the position that the credits already acquired could be
B
utilised notwithstanding rescinding of the relevant notification, even though
the stand taken by the Union of India in the counter affidavit filed in this
Court is to the contrary. But according to Mr. Iyer the accumulated credit in
favour of the assessee under the old notification of the year 1987 can be
utilised subject to the conditions mentioned in the notification itself and in c
that view of the matter, an assessee is not entitled to utilise the accumulated
credit under the old notification as well as the credits earned under the new
notification of the year 1989 simultaneously and accordingly, the authorities
of the department have taken the correct view. In support of this contention,
reliance bas been placed on the decision of the Karnataka High Court in the D
case of Union of India v. Modem Mills Ltd., 1994(72) E.L.T. 246 (Kar.).

In view of the rival submissions at the Bar, the only question that falls
for consideration is whether the decisions of the Gujarat and Andhra Pradesh
"'"i High Courts, on which reliance has been placed by Mr. Dave are susceptible
of a construction that the Courts came to the conclusion that the accumulated E
credits under two different notifications one of the year 1987 and another of
the year 1989 could be availed of by the assessee for the purpose of payment
of duty on the manufactured goods simultaneously or the condition No. 3 of
the notification issued in the year 1987, providing that the amount of credit
utilised shall not exceed Rs.1000 per M.T. of available products, would F
operate. Answer to this question would depend upon an interpretation of the
scheme itself and the notification issued as well as the ratio of the decisions
of these High Courts on which the counsel for the appellant placed reliance.

Chapter AAA of the Rules contains provisions, providing for credit of
money in respect of certain raw materials used in the manufacture of certain G
~ excisable goods. Rule 57K(l) itself stipulates accumulation of credit of
money for use of inputs in the manufacture of final products can be availed
of only, when a notification is issued by the Central Government and that
notification itself would provide the rates at which credit could be accumu-
lated and also allowing such credit to be utilised for payment of duty on the H
1078 SUPREME COURT REPORTS [2000] 3 S.C.R.
'F- 41f-

A fmal products and this must be subject to the conditions, if any, stipulated
in the very notification itself. In the aforesaid scheme of the provision, the
notification issued by the Central Government in exercise of powers conferred
under Rule 57K, plays an important role. If the notification that had been
issued in the year 1987 is examined, it would appear that paragraph (iii)
unequivocally, provides that the amount of credit utilised for payment of duty
B
shall not exceed Rs.1000 per tonne of vegetable products on any ii1dividual
~·
clearance. It is thus clear that credits may be accumulated in favour of a
I
manufacturer of vegetable products, pursuant to the notification on the basis
of rates provided in the notification on the inputs and that credit could be
utilised for payment of duty while clearing the fmal product and the accu-
c mutated credit will not ipso facto get exhausted or lapsed on the rescinding
of the notification issued under Rule 57K of the Rules, and therefore,
notwithstanding the rescinding of the notification issued in the year 1987 by )..
the notification dated 25th of August, 1989, a manufacturer would continue
to utilise the credit accumulated in his favour for payment of duty, even after
D the recession of the notification, but subject to the provision, contained in
Clause (iii) of the notification, which granted the accumulation of credit and
utilisation of the same for payment of duty. When a fresh notification is issued
as in this case, the notification dated 11th of October, 1989, certainly the
manufacturer would be entitled to accumulate credits on the basis of the said )"-

E notification and would also be entitled to utilise the same for payment of duty
on the fmal products, but even under that notification, the similar provision
as in the earlier one, namely clause (iii) is there, indicating, that the quantity
of credit utilised for payment of duty on any individual clearance of the fmal
products shall not exceed rupees one thousand per tonne of vegetable
products cleared. This being the position, we really fail to understand as to
F ~
how a manufacturer can contend that he would be entitled to the advantages
of both the notifications simultaneously in respect of one transaction for
payment of duty, while clearing the transaction in question. Before the Gujarat
High Court in Dipak Vegetable Oil Industries case, after the notification of
the year 1987 was withdrawn by the Central Government under Notification
G No. 39/89 on 25.8.89, the Excise Authorities being of the view that the
manufacturer cannot avail of the accumulated credit for payment of excise ~

duty, intimated the manufacturer that they should file fresh classification list:
It is this intimation from the excise authorities which had been assailed before
the High Court and the High Court on an analysis of the provisions of the
H Rules, more particularly, Rule 57K, dealing with applicability and extent of
TUNGABHADRA INDUS. LTD. v. U.0.1. [PATTANAIK, J.] 1079
~
credit and Rule 57N, dealing with the manner of utilisation of credit, came A
to the conclusion that the credits already accrued and acquired on the basis
of the notification issued by the Central Government in the year 1987 in
exercise of powers under Rule 57K, the same cannot be taken away by
rescinding the notification in question and the effect of the rescinding
notification is from the date of the said notification, the manufacturer would B
cease to earn the benefit of credit of money, but not deprived of the right
to utilise the credit of money which they have already earned validly and
could be used for payment of excise duty and the excise authorities were in
error. In the penultimate paragraph of the said judgment, the Court has
observed that the benefits in question will be in addition to the benefits which
have again been made available to them under Notification No. 45/89 and c
46/89 dated 11th of October, 1989 and it is this observation on which Mr.
Dave, the learned counsel for the appellant strongly relied upon for his
contention that it tantamounts to a conclusion that the benefit earned under
both the notifications can be availed of simultaneously. We are unable to
accept this submission of Mr. Dave. D

The question whether the benefits of both the notifications can be
availed of simultaneously was not a subject matter of consideration before
-~ the Gujarat High Court and in fact the credit acci.imulated under the subse-
quent notification of 11th of October, 1989 was not a matter for consideration
E
at all. That apart, Clause (iii) of both the notifications, clearly provides that
-" the amount of credit utilised for payment of duty shall not exceed rupees one
thousand per tonne of vegetable products on any individual clearance. When
the credits get accumulated in accordance with the rates indicated in the
notification itself then the same can be utilised also in accordance with the
terms and conditions contained in that notification and, therefore, it is not F
permissible to construe the judgment of Gujarat High Court that it has been
held therein that the manufacturer could avail of the credits accumulated
under both the notifications simultaneously. To the said effect also is the
judgment of the Andhra Pradesh High Court on which Mr. Dave placed
reliance. The only thing what both the High Courts have held is that the rights G
..., acquired or money credit accumulated, is not taken away by rescinding of
the notification in question. In fact the decision of the Karnataka High Court
in the case of Union of India v. Modern Mills Ltd., 1994(72) E.L.T.246 (Kar.),
considers and approves the aforesaid decision of the Gujarat High Court and
Andhra Pradesh High Court and holds that the accumulated credit would not H
1080 SUPREME COURT REPORTS [2000] 3 S.C.R.
A be ceased with the rescinding of the notification and on the other hand, could
be utilised by the assessee towards excise duty payable on its final products
thereafter. But it has been further held that the said accumulated credit could
be utilised only subject to the conditions of the notification and consequently,
if'!s; .µot open to the manufacturer to insist on· Clearing his finished products,
witi1b~- p_aying any amount of excise duty by merely effecting two d~bit
B
entries of.th~ aecumulated credits. In other words, what has been held by the
Kamataka High COurt in the aforesaid decision is that though the manufac-
turer would be entitl_ccr'to utilise the &.ecumulated credits under the rescinded
notification and can also accumulate further credits on the basis of the fresh
notification of the year 1989, but is not entitled to claim adjustment on the
c basis of both the ac'cumulated credits simultaneously. We approve the views
taken by the Karnataka High Court and we further hold that neither in the
decision of the Gujarat High Court nor in the decision of the Andhra Pradesh
High Court, anything contrary has been said, so far as Jhe question of
utilisation of the credit for payment of duty on the manufactured goods are
D coii:cepied. In this view of the matter, the Excise Authorities have rightly dealt
with tii'e matter of utilisation of the accumulated credit in favour of the
appellant-manufacturt:r and we see no infirmity in the same.

This appeal accordingly fails and is dismissed, but in the circumstances,
there will be no order as to costs.
E
A.K.T. Appeal dismissed.
..