Show cause notice invoking obsolete Modvat provisions is unsustainable after their substitution by the Cenvat regime.

A show cause notice invoking Modvat provisions after their substitution by the Cenvat regime is unsustainable where no saving clause preserves the earlier provisions. Once Notification No. 27/2000-C.E. (N.T.) replaced Modvat with Cenvat, the earlier rules were no longer in force on the date of the notice, so a demand founded on them lacked statutory support.

---

---

Issues: Whether the show cause notice was sustainable when it invoked Modvat provisions that had already been substituted by Cenvat provisions on the date of issuance.

Analysis: The demand was based on Modvat provisions even though those provisions had been substituted by the Cenvat regime through Notification No. 27/2000-C.E. (N.T.) dated 31.03.2000. On the date of the show cause notice, the earlier Modvat provisions were no longer in force and there was no saving clause preserving them for such invocation. The notice was therefore founded on provisions that were not available in the statute book when it was issued.

Conclusion: The show cause notice was not sustainable and the appeal succeeded on that ground.

---