Modvat credit entitlement turns on the law at original credit-taking date, not a later certificate or amendment.

Entitlement to additional Modvat credit under Rule 57E depended on the law in force when the inputs were received and credit was first taken. Where 95% credit had already been availed before the notification dated 28.02.1999 removed the restriction and restored 100% credit, the later amendment did not reopen entitlement to the remaining 5% on the same inputs. The date of the 57E certificate was not decisive; the operative date was the original credit-taking date. The revised provision applied only prospectively to credit taken on or after 28.02.1999, so excess credit was liable to be expunged.

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Issues: Whether the assessee was entitled to take the balance 5% Modvat credit under Rule 57E of the Central Excise Rules, 1944 on differential duty paid through a 57E certificate, when the inputs had been received and 95% credit had already been taken before the notification removing the 95% restriction.

Analysis: The restriction limiting Modvat credit to 95% remained in force when the inputs were received and when credit was originally taken. The subsequent notification dated 28.02.1999 restored 100% credit only from that date. The decisive factor was not the date of the 57E certificate, but the date on which the inputs were received and credit was already availed. Since the assessee had already taken 95% credit before the change in the law, the later removal of the restriction did not reopen entitlement to an additional 5% on the same inputs. The trade notice merely reflected that the revised provisions would apply only where credit was taken on or after 28.02.1999.

Conclusion: The assessee was not entitled to the additional 5% credit, and the demand for expunction of excess credit was upheld.

Ratio Decidendi: Entitlement to Modvat credit is governed by the law in force when credit is originally taken on the inputs; a later notification removing a restriction does not permit enhancement of credit where the restricted credit had already been availed before the amendment.

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