B.P.Banerjee, J. - (1.) In this writ application the petitioner challenged the validity of the Circular No. MF (DR) letter No. B 22/27/86-T H U dated 20th June, 1986 issued by the Respondent No. 4 Union of India in so far as the same seeks to deny the manufacturer the right to opt out from the MODVAT Scheme during a financial year as also the order dated 23-11-1987 issued by the Assistant Collector of Central Excise, Calcutta, whereby the petitioners were not permitted to opt out from the MODVAT scheme during the financial year in question as also two notices dated 31st December, 1987.
(2.) The petitioner's case in short is that the petitioner was the manufacturer and seller of printed cartons and the petitioner has his factory at 72, Tiljala Road, Calcutta. It is not disputed that Central Excise duty is leviable on the said printed cartons manufactured by the petitioner at the rate provided under Heading 4818.13 of the First Schedule to the Central Excise Tariff Act, 1985. By the Finance Act, 1986 the scheme of credit for inputs used for the manufacture of excisable goods were introduced which was known as Modified Value Added Tax (referred to as MODVAT). Under the MODVAT SCHEME while making payment of excise duties of finished products the excise duty levied on the materials used by the manufacturers are adjusted, or in other words, if any duty is paid on the materials used in the manufacturing process, in that event, while making payment of excise duty on the end-product, the duty which is already paid in respect of those materials are deducted, or in other words some reliefs are given to the manufacturers. The petitioner opted for the MODVAT Scheme instead and place of benefit available to the petitioner as a small scale industrial unit. The petitioner filed declaration in this regard on 30th March, 1987 in accordance with 57-O (1) of the Central Excise Rules in prescribed manner indicating the description of final product manufactured in the factory and inputs intended to be used in respect of the final product and on & from 1st April, 1988 the petitioner availed of the benefit of the credit of duty paid on the inputs received by it for the purpose of manufacture of the said goods at its said factory and that according to the petitioner till 9th June, 1987 the petitioner availed of MODVAT Credit to the tune of Rs. 19,594.11 p. in respect of the said inputs.
(3.) The petitioner's case is that by the Notf. dated 20th May, 1987 the Central Government sought to restrict the credit that could be taken on inputs in respect of the final products on paper and paper board classifiable under Chapter 48 of the Tariff Act to the extent of Rs. 8007- per tonne or the actual duty paid whichever is less and that the petitioner found that the very purpose for which it had opted for benefit under the MODVAT Scheme in preference to the benefit that it was entitled to or was availed of as a small scale industrial unit had completely ceased to exit and accordingly the petitioner intended to opt out from the said scheme. By the letter dated 17th June, 1987 the petitioner informed the Respondent No. 1 about its decision to opt out from the said scheme. It is stated that by the order dated 23rd November, 1987 the petitioner was informed by the Assistant Collector of Central Excise as follows :- "The previous Classification List No. 1/87-88 submitted through the Range Superintendent has been approved. In the said Classification list you have declared your intention to avail MODVAT benefit with effect from 1-4-1987. Accordingly, such benefit was actually availed of by you as admitted in your letter mentioned above. As per the Classification of Govt. of India you are not permitted to opt out of MOD VAT scheme during the pendency of the current financial year for reasons mentioned above.";