Clarificatory amendment to Rule 56A treated as retrospective where it merely affirmed existing proforma credit practice.

Notification No. 118/80-C.E. inserting an Explanation to Rule 56A was treated as clarificatory and therefore retrospective because it did not alter the substantive proforma credit scheme, but only affirmed the existing practice of allowing credit on materials or component parts manufactured in the same factory. The Tribunal also noted the departmental Trade Notice stating that the notification had retrospective effect and treated that position as binding on the Revenue. On that basis, the Revenue's reference application failed.

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Issues: Whether Notification No. 118/80-C.E. inserting an explanation to Rule 56A operated retrospectively and, consequently, whether the Revenue's reference application was maintainable.

Analysis: The Explanation inserted by Notification No. 118/80-C.E. was treated as clarificatory because it did not alter the substantive scheme of proforma credit under Rule 56A, but only affirmed the existing practice of allowing credit on materials or component parts manufactured in the same factory. The Tribunal also relied on the departmental Trade Notice stating that the notification had retrospective effect, and treated that departmental position as supporting the assessee's stand. In addition, the binding character of such trade notices on the Revenue was noted.

Conclusion: The Notification had retrospective effect, and the Revenue's challenge to that view was rejected.

Final Conclusion: The application for reference failed, leaving the retrospective operation of the clarificatory amendment in favour of the assessee.

Ratio Decidendi: A clarificatory amendment that merely explains an existing scheme, and is reflected in binding departmental trade notices, is to be treated as retrospective.

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