Modi Rubber Limited Vs Union of India And 2 Others (Allahabad High Court)
Summary : The Allahabad High Court, in Modi Rubber Limited Vs Union of India and 2 Others, examined the legality of two Show Cause Notices issued by the Commissioner, Central Excise and Customs, Meerut-I, dated 10 September 2021 and 23 September 2021. These notices required Modi Rubber Ltd. to explain why the utilization of Additional Excise Duty (Goods of Special Importance) [AED(GSI)] amounting to ₹3,06,95,274 towards payment of Basic Excise Duty (BED) on final products between October 1997 and January 1998 should not be disallowed under Rule 12 of the CENVAT Rules, 2002 read with Section 88 of the Finance Act, 2004. The notices further proposed that all such clearances be treated as non-duty paid, and recovery of duty, interest, and penalties be initiated.
The petitioner company, engaged in the manufacture of tyres, tubes, and flaps, had used Tyre Cord Fabric as input between 13 October 1993 and 19 January 1998. This input attracted Additional Excise Duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. A significant amendment to the MODVAT Rules, effective from 1 March 1997, allowed credit of specified duties paid on inputs to be utilized towards payment of duty on any final product, even if the input was not used in its manufacture, provided it was received and used in the factory after 1 March 1997.
