M/S Sml Isuzu Ltd. & Anr. vs Uoi & Anr. on 22 July, 2016

1. The Petitioners in WP(C) Nos.1824/2000 and 1826/2000 have filed

the said petitions under Article 226 of the Constitution of India, inter alia,

impugning Sections 131 (b), 132(1)(a), and 132 (2) of the Finance Act,

1999 as being ultra vires the Constitution of India.

2. By virtue of Section 131 (b) of the Finance Act, 1999, clause (xxviii)

was introduced in Sub-section 2 of Section 37 of the Central Excise Act,

1944 (hereinafter referred as the Act), to specifically empower the Central

Government to make rules to provide for the lapsing of credit of duty lying

unutilised with the manufacturer from a specified date.

3. Section 132 (1) (a) and Section 132 (2) of the Finance Act, 1999

W.P.(C) Nos.4754/1995, 1824/2000, & 1826/2000 Page 2 of 37
were enacted to validate Sub-rule (4A) of Rule 57F of the Central Excise

Rules, 1944 (hereafter ‘the Rules’) which had been held to be beyond the

rule making power of the Central Government by the Supreme Court in

Eicher Motors Private Limited v. Union of India: 1999 (106) ELT 3 (SC).

By virtue of the said sub-rule, MODVAT credit in respect of Excise duties

paid on inputs for manufacture of goods falling under the heading no.

87.01, 87.02, and 87.04 and 87.06 of the Schedule to the Central Excise

Tariff Act, 1985 lying unutilised as on 16.03.1995, was mandated to have

lapsed and consequently unavailable for payment of duty on excisable

finished goods.

Source: Indian Kanoon

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