Excise duty credit cannot be used across restricted duty heads; basic duty credit was barred from offsetting additional duty liability.

Basic Excise Duty credit on inputs and capital goods could not be used to discharge Additional Excise Duty on cotton yarn and blended yarn, because Rule 57A(2) had to be read with the definition of duty and the restrictions in Notification No. 21/99-C.E. (N.T.), which did not permit such cross-utilisation. The departmental clarification on Cenvat did not control the interpretation of Rule 57A or the notification. The assessee's appeal failed, the Revenue's objection on capital goods credit succeeded, and the debit already made was to be restored by corresponding credit in the relevant account.

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Issues: Whether credit of Basic Excise Duty on inputs and capital goods could be utilised for payment of Additional Excise Duty on cotton yarn and blended yarn, and whether the debit made from the credit account was liable to be restored.

Analysis: Rule 57A(2) permitted utilisation of credit of specified duty towards payment of duty of excise on final products, but the expression had to be read with the definition of duty and the restrictions in the relevant notification. Rule 2(7) confined duty to duty payable under Section 3 or Section 3A of the Central Excise Act, 1944, and Notification No. 21/99-C.E. (N.T.) restricted the use of credit in a manner that did not permit Basic Excise Duty credit to be used for discharging Additional Excise Duty liability. The departmental clarification relied upon was treated as relating to Cenvat and not as controlling the interpretation of Rule 57A or the notification.

Conclusion: Credit of Basic Excise Duty on inputs or capital goods could not be utilised for payment of Additional Excise Duty on the finished products. The assessee's appeal failed, while the Revenue's objection on capital goods credit succeeded, and the debit already made was directed to be restored by corresponding credit in the relevant account.

Ratio Decidendi: Where the governing rule and notification restrict utilisation of specified duty credit to particular duty liabilities, Basic Excise Duty credit cannot be extended to discharge Additional Excise Duty unless the statutory scheme expressly permits it.

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