CENVAT credit on capital goods remained limited to 50% for the year; later 100% credit amendment was not retrospective.

The applicable CENVAT credit rule for the relevant financial year restricted credit on capital goods to 50% in that year, with the balance available later under the rule. A subsequent proviso allowing 100% credit applied only from 01.03.2002 and could not operate retrospectively. Section 38A of the Central Excise Act preserved the earlier rule and the rights and liabilities arising under it, so Sections 21 and 24 of the General Clauses Act could not be used to expand the credit entitlement. The assessee was therefore not entitled to claim full credit for the earlier year, and the issue was decided in favour of the Revenue.

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Issues: Whether the assessee was entitled to avail 100% CENVAT credit on capital goods during the relevant financial year by relying on a later amendment and the General Clauses Act, despite the then prevailing restriction permitting only 50% credit.

Analysis: The applicable rule for the relevant financial year allowed only 50% of the duty paid on capital goods to be taken as CENVAT credit in that year, with the balance being available in a subsequent year subject to the rule. The later proviso enabling 100% credit came into force only from 01.03.2002 and could not be retrospectively applied to the earlier period. Section 38A of the Central Excise Act, 1944 expressly preserves the previous operation of the unamended rule and the rights and liabilities arising under it, leaving no scope to invoke Sections 21 and 24 of the General Clauses Act, 1897 for enlarging the credit entitlement.

Conclusion: The assessee was not entitled to 100% CENVAT credit for the relevant year, and the issue was decided against the assessee and in favour of the Revenue.

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