Prospective amendment to Cenvat credit rules cannot deny valid credit taken on a supplementary invoice for differential duty.

Cenvat credit on a supplementary invoice for differential duty paid on inputs was available under the unamended Rule 57AE(1)(i) when the credit was taken. The later amendment introduced by Notification No. 6/2001-C.E. (N.T.) operated only prospectively from 1-3-2001 and could not be applied retrospectively to deny credit already validly availed. Since payment of the differential duty, receipt of the inputs, and their use in manufacture were accepted, the essential conditions for credit were satisfied and the denial was not justified.

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Issues: Whether Cenvat credit could be denied on the basis of a supplementary invoice issued for differential duty paid on inputs, by applying the amendment to Rule 57AE retrospectively.

Analysis: The credit was taken on 19-1-2001, when the unamended Rule 57AE(1)(i) permitted credit on the strength of a supplementary invoice issued by the input manufacturer for additional excise duty paid. The subsequent amendment brought in by Notification No. 6/2001-C.E. (N.T.) with effect from 1-3-2001 created an exception, but that amendment had no retrospective operation. The payment of differential duty by the input manufacturer was not in dispute, and the receipt and use of the inputs in manufacture had already been accepted. The essential conditions for availment of credit were therefore satisfied.

Conclusion: The denial of credit was not justified. The appellants were entitled to Cenvat credit on the supplementary invoice, and the assessee succeeded.

Ratio Decidendi: An amendment restricting availment of Cenvat credit on supplementary invoices operates only prospectively unless expressly made retrospective, and credit validly taken under the unamended rule cannot be denied by later amendment.

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