Modvat credit utilisation on input duty prevailed over a restrictive notification for payment on final products.

Rule 57F(12) permits utilisation of specified Modvat credit on inputs for payment of duty on any final product where the inputs are received and used in the factory on or after 1 March 1997. Credit of Additional Excise Duty on unprocessed tyre cord fabrics was therefore held usable towards payment of Basic Excise Duty and Additional Excise Duty on the final products. The restrictive effect of Notification No. 5/94-CE (NT) did not prevail over the wider enabling language of Rule 57F(12) on the facts found, so the credit was treated as validly utilisable.

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Issues: Whether Modvat credit of Additional Excise Duty taken on unprocessed tyre cord fabrics could be utilised for payment of Basic Excise Duty and Additional Excise Duty on final products under Rule 57F(12), despite the restrictions in Notification No. 5/94-CE (NT).

Analysis: Rule 57F(12) contains a non obstante clause and an enacting clause permitting credit of specified duty on inputs to be utilised towards payment of duty on any final product, provided the inputs are received and used in the factory on or after 1 March 1997. The credit in question was Additional Excise Duty paid on tyre cord fabric, and the Tribunal followed the view that such credit could be used towards payment of Basic Excise Duty. The restriction in Notification No. 5/94-CE (NT) did not override the wider utilisation permitted by Rule 57F(12) on the facts found.

Conclusion: The credit was held to be validly utilisable towards payment of Basic Excise Duty and Additional Excise Duty on the final products, and the assessee succeeded.

Ratio Decidendi: Where Rule 57F(12) permits utilisation of specified duty credit on inputs for payment of duty on any final product, that enabling provision prevails over a restrictive notification to the extent of such utilisation.

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