New Delhi, Nov 16: The Delhi high court has stayed the government notification withdrawing the Modvat credit scheme, which affected thousands of manufacturers, as it appeared "to convey an impression of being arbitrary and irrational".

A division bench comprising justice RC Lahoti and justice JK Mehra, in its interim order recently, also stayed the centre's decision to confiscate the Modvat credit lying in the account of the manufacturers till August one.

The proposal to withdraw the scheme to streamline excise duty collection was stressed upon by finance minister P Chidambaram in his 1997-98 budget speech and the notification was issued on August one. The centre's advocate Rakesh Tiku defended the withdrawal of the scheme as it saved a lot of manpower engaged to go through cumbersome procedures. With the stay on the notification, the manufacturers of the final product will be entitled to utilise the credit the moment inputs/raw materials are received in the fatory. A bunch of petitions were filed challenging the amendment to the excise act, but only a couple of them sought a stay on the notification.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.