Special credit rule with non obstante clause blocks importing Rule 57A credit limits into furnace oil Modvat claims.

A restriction on the quantum of Modvat credit under Notification No. 14/97, framed under Rule 57A(3), was held not to apply to furnace oil credit taken under Rule 57B. The Tribunal reasoned that Rule 57B operated as a special credit provision with a non obstante clause, and that the later amendment of 2-6-1998 specifically addressed the scope of the credit restriction. On that scheme, the Rule 57A limitation could not be imported by implication to curtail credit under Rule 57B. The appeal was allowed with consequential relief.

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Issues: Whether the restriction on the quantum of Modvat credit imposed by Notification No. 14/97, issued under Rule 57A(3) of the Central Excise Rules, 1944, applied to furnace oil when credit was taken under Rule 57B of the Central Excise Rules, 1944.

Analysis: The Tribunal examined the competing interpretations of Rules 57A and 57B, the effect of the non obstante clause in Rule 57B, and the impact of the amendment made on 2-6-1998 by Notification No. 21/98-C.E. (N.T.). It held that the amended framework indicated that the restriction under Notification No. 14/97 could not automatically be imported into Rule 57B credit. The Tribunal accepted that the later amendment specifically dealt with the restriction on credit and that the Revenue's attempt to apply the Rule 57A restriction to Rule 57B credit was not supported by the scheme of the rules.

Conclusion: The restriction imposed by Notification No. 14/97 was not applicable to credit taken on furnace oil under Rule 57B of the Central Excise Rules, 1944, and the appeal was allowed with consequential relief.

Ratio Decidendi: Where a special credit rule contains a non obstante clause and the later amendment specifically regulates the extent of credit, a restriction attached to another rule cannot be imported by implication to curtail credit under the special rule.

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