Modvat credit right remains substantive as Rule 57E stayed procedural and clarificatory for additional duty on inputs.

Rule 57A conferred the substantive Modvat credit right on duty-paid inputs, while Rule 57E governed only the adjustment mechanism and could not narrow that entitlement. The scheme was directed to full credit for duty on inputs and to preventing duty on duty. The proviso to Rule 57G fixed the time and documentary basis for availing credit, but did not bar additional credit where further duty on the same inputs was paid after receipt. The 15-4-1987 amendment merely made explicit what was already implicit, so Rule 57E in its earlier form was clarificatory and procedural.

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Issues: Whether Rule 57E of the Central Excise Rules, as it stood prior to 15-4-1987, was merely clarificatory and procedural, and whether it could be read as limiting the manufacturer's entitlement to Modvat credit on additional duty paid on inputs after receipt of those inputs.

Analysis: Rule 57A conferred the substantive right to take credit of duty paid on inputs used in the manufacture of final products, while Rule 57E dealt only with the manner of adjustment of such credit. The scheme of Modvat, read with the earlier proforma credit regime, showed that the legislative object was to grant full credit for duty paid on inputs and to prevent duty on duty. The proviso to Rule 57G fixed the time and documentary basis for availing credit, but did not curtail the substantive right to claim further credit where additional duty on the same inputs was paid after receipt. The omission in the earlier form of Rule 57E to expressly deal with recovery of additional duty did not justify restricting the benefit intended by Rule 57A. The amendment made on 15-4-1987 merely made explicit what was already implicit in the scheme and therefore had clarificatory and procedural character.

Conclusion: Rule 57E, as it stood prior to 15-4-1987, was clarificatory and procedural and did not take away the manufacturer's right to additional Modvat credit on subsequently paid duty on inputs.

Final Conclusion: The interpretation adopted by the Tribunal was affirmed, and the assessee's entitlement to the credit was sustained.

Ratio Decidendi: A procedural rule governing adjustment of duty credit cannot be construed to curtail the substantive Modvat credit right conferred by the charging scheme; an amendment that merely makes explicit the existing entitlement is clarificatory and applies to pending situations.

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