Modvat credit rate follows notification period; after expiry, credit at 15% ad valorem was allowed.

Modvat credit under Notification No. 5/94-C.E. (N.T.) was restricted to 10% ad valorem only while the notification remained in force; once it expired on 28-2-1999, that restriction ceased. Inputs received after expiry, where invoices reflected duty at 15% ad valorem, could therefore qualify for credit at that rate. The CESTAT held that the respondents were entitled to avail credit at 15% ad valorem and the Revenue's challenge failed.

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Issues: Whether the respondents were entitled to take Modvat credit at 15% ad valorem, or whether the credit was restricted to 10% ad valorem under Notification No. 5/94-C.E. (N.T.), dated 1-3-1994, in respect of inputs received after the notification had expired.

Analysis: The restriction under Notification No. 5/94-C.E. (N.T.) applied only so long as the notification remained in force. Since the notification expired on 28-2-1999, the limitation to credit at 10% ad valorem also ceased thereafter. The inputs were received after that date, and the invoices showed duty at 15% ad valorem. In those circumstances, the respondents were entitled to avail credit at the same rate.

Conclusion: The credit at 15% ad valorem was correctly allowed, and the Revenue's challenge failed.

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