UNION OF INDIA vs MAHARAJA SHREE UMAID MILLS

The Supreme Court addressed the liability to pay interest under Section 112 of the Finance Act, 2000, concerning the MODVAT credit availed by the respondent, Maharaja Shree Umaid Mills, for High Speed Diesel Oil used in manufacturing. The Court held that the withdrawal of MODVAT credit through a 1995 Notification and subsequent Trade Notice was valid, and the respondents were liable to pay interest on the availed credit as they were not entitled to it. The appeals by the Union of India were thus upheld, confirming the imposition of interest under the Central Excise Rules, 1944.