M/S. SHREE HARI CHEMICALS EXPORT LTD. vs UNION OF INDIA

The Supreme Court addressed the applicability of the Modvat Credit Scheme under Rule 57A and the Proforma Credit Scheme under Rule 56A of the Central Excise Rules, 1944. The Court held that the credit of duty on Naphthalene, classified under Chapter 27 of the Central Excise Tariff Act, was not available due to a notification issued on 1st March 1986, which explicitly excluded such inputs. Consequently, the Court upheld the show-cause notice issued against the appellant for wrongfully claiming credit amounting to Rs. 2,46,109/- on Naphthalene used in the manufacture of Hydrochloric Acid.