Modvat credit on Residue Fuel Oil could not be restricted where the notification did not cover the input or support the lower duty cap.

Modvat credit on Residue Fuel Oil was not confined by Notification No. 14/97-CE (NT) to duty calculated at 10% ad valorem because the notification did not cover that input. In the absence of material showing that the duty actually paid on the input matched the lower rate relied on for restriction, there was no legal basis to curtail the credit. The restrictive amendment to the earlier notification therefore did not apply to Residue Fuel Oil, and full Modvat credit remained available to the assessee.

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Issues: Whether Modvat credit on Residue Fuel Oil was restricted by Notification No. 14/97-CE (NT) to the extent of excise duty calculated at 10% ad valorem.

Analysis: The Notification No. 14/97-CE (NT), which amended the earlier Notification No. 5/94-CE (NT), was held not to cover Residue Fuel Oil. The restriction to 10% ad valorem could not be applied in the absence of material showing that the duty actually paid on the input was at that rate and not at the higher credit amount claimed. Since the input was outside the scope of the restrictive notification, no legal basis existed to curtail the credit.

Conclusion: The restriction on Modvat credit was not attracted to Residue Fuel Oil and the assessee was entitled to the full credit.

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