Modvat credit restriction on light liquid paraffin cannot apply where it is distinct from paraffin wax and full credit is admissible.

Light liquid paraffin was held to be chemically and physically distinct from paraffin wax, so a Modvat credit restriction capped at 10% ad valorem could not be applied by treating the two as the same commodity. Because the supplier's invoices and the classification under sub-heading 2710.90 were not disputed, full credit on the duty paid on light liquid paraffin was treated as admissible and the restriction was found inapplicable.

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Issues: Whether light liquid paraffin could be treated as paraffin wax for the purpose of limiting Modvat credit to 10% ad valorem under the relevant notifications, and whether full credit was admissible on goods classified under sub-heading 2710.90.

Analysis: The description in the Indian Pharmacopoeia showed that paraffin wax and light liquid paraffin were chemically and physically distinct commodities. Paraffin wax is a purified mixture of solid hydrocarbons, whereas light liquid paraffin is a purified mixture of saturated liquid hydrocarbons; the Revenue also did not dispute the classification shown in the supplier's invoices. In these circumstances, the goods could not be treated as the same commodity, and the restriction under the cited notifications applicable to the disputed goods was not attracted.

Conclusion: The limitation of Modvat credit to 10% ad valorem was not sustainable, and the assessee was entitled to credit of the entire duty paid on light liquid paraffin.

Final Conclusion: The order denying the disputed Modvat credit was set aside and the appeal succeeded.

Ratio Decidendi: Where the commodity covered by the invoice is chemically and classification-wise distinct from the commodity to which a credit restriction applies, the restriction cannot be applied by treating them as the same goods.

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