Modvat credit on differential special excise duty remained available under Rule 57E despite later withdrawal of the credit facility.

Entitlement to Modvat credit under Rule 57E continued where differential special excise duty was paid later for inputs cleared before abolition of that duty. The right to credit depended on a subsequent variation in duty on inputs for which credit had already been allowed under Rule 57A. The later withdrawal of the credit facility for special excise duty did not affect credit on differential duty relating to prior clearances. Rule 57E permits adjustment when duty already allowed under Rule 57A is later varied for any reason, and the assessee was entitled to the credit.

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Issues: Whether differential special excise duty paid for clearances made prior to the abolition of special excise duty could be taken as Modvat credit under Rule 57E, even though the credit facility for such duty was withdrawn thereafter.

Analysis: The entitlement under Rule 57E depends on a subsequent variation in the duty paid on inputs in respect of which credit had already been allowed under Rule 57A. The relevant clearances and the original availability of credit related to the period when special excise duty was leviable. The later withdrawal of the facility for availing credit of special excise duty did not affect the assessee's right to credit for differential duty paid subsequently in respect of prior clearances. Rule 57E operates on the basis that duty already allowed under Rule 57A may be adjusted when the duty on inputs is later varied for any reason.

Conclusion: The assessee was entitled to Modvat credit of the differential special excise duty under Rule 57E.

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