Modvat credit cap for job-worker inputs remains applicable despite Rule 57J non obstante clause.

Rule 57J did not expand the quantum of Modvat credit available on inputs sent directly to job workers. The non obstante clause in Rule 57J only permitted credit for such inputs and did not displace the limitation under Notification No. 5/94-C.E., as amended, restricting credit to 95% of the duty paid on eligible inputs. Rule 57A continued to govern the duties eligible for credit, so the prescribed cap remained applicable. Full credit beyond that limit was therefore unavailable.

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Issues: Whether the restriction limiting Modvat credit to 95% of the duty paid on inputs applied to inputs sent directly to job workers under Rule 57J, despite the non obstante clause in that rule.

Analysis: Rule 57A governed the duties that were eligible for credit under the Modvat scheme, and Rule 57J did not enlarge the category or extent of such duties. The non obstante clause in Rule 57J only enabled credit to be taken in respect of inputs sent to job workers and did not override the limitation on the quantum of specified duty available as credit under Notification No. 5/94-C.E. as amended. The restriction therefore continued to apply to the inputs in question.

Conclusion: The assessee was not entitled to full credit beyond the limit prescribed under Notification No. 5/94-C.E. as amended.

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