Cross-utilization of excise credit permitted where the rule text allowed it and circular guidance could not narrow the statute.

Cross-utilization of Additional Excise Duty credit was allowed for payment of Additional Excise Duty on Goods of Special Importance on the final product during the relevant period. The rule was read on its plain language, and the statutory scheme in force before 31 March 2000, together with later substitution of the credit provisions, was taken to permit utilization of credit across the specified duty categories. A Board circular could not restrict the scope of the rule where the text did not impose an express prohibition. On that basis, the demand and penalties did not survive, and the impugned order was set aside.

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Issues: Whether credit of Additional Excise Duty paid on textile and textile articles could be utilized for payment of Additional Excise Duty on Goods of Special Importance on the final product during the relevant period.

Analysis: The dispute turned on the interpretation of the Modvat and Cenvat credit provisions governing utilization of credit of different kinds of additional excise duty. The relevant rule position prior to 31 March 2000 and the later substitution of the scheme were examined. The expression used in the rule was construed on its plain language, and the Board circular was held not to override the statutory text. The earlier Tribunal view and the later clarification in the rules showed that, for the period under consideration, cross-utilization of the credit was permissible.

Conclusion: The credit was legally utilizable for payment of the duty on the final product, and the demand and penalties could not survive.

Final Conclusion: The impugned order was set aside and all the appeals succeeded with consequential relief.

Ratio Decidendi: Where the statutory language permits utilization of credit of one specified duty and does not expressly prohibit the cross-utilization in question, the provision must be given its plain meaning and an administrative circular cannot restrict the scope of the rule.

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