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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether credit of additional excise duty taken on inputs could be utilised towards payment of basic excise duty on the final product under the amended scheme of the Central Excise Rules, 1944 and Notification No. 5/1994-C.E. (N.T.).
Analysis: The credit was initially restricted to payment of the duty corresponding to the additional duty component, but Rule 57F(12) was later amended by inserting a proviso. That proviso stated that, notwithstanding Rule 57A and the notifications issued thereunder, the credit of specified duty allowed in respect of inputs could be utilised towards payment of duty of excise on any other final product, even if those inputs were not actually used in the manufacture of that other final product, provided the inputs were received and used in the factory on or after 1 March 1997. The amendment displaced the earlier restriction and made the broader utilisation of credit legally permissible.
Conclusion: The credit could be utilised towards payment of basic excise duty on the final product, and the question was answered in favour of the assessee and against the Revenue.
Ratio Decidendi: A statutory proviso inserted into the Modvat credit scheme can enlarge the permissible utilisation of credit notwithstanding earlier notification-based restrictions, if the proviso expressly overrides them.
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