MODVAT opt-out rights cannot be curtailed by circulars where the statutory scheme allows withdrawal within the financial year.

A manufacturer under the MODVAT concession scheme could opt out during the same financial year because the scheme contained no express bar requiring continued participation for the full year. The Court treated MODVAT as a statutory credit facility and held that an administrative circular could not add a restriction inconsistent with the scheme's object. It also applied the principle that there is no estoppel against statute. The trade notice clarifying that opt-out was permissible supported this interpretation, and the circular was invalid to the extent it denied that right.

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Issues: Whether a manufacturer who had opted for the MODVAT scheme could be denied the right to opt out during the same financial year, and whether the circular restricting such opt-out was valid.

Analysis: The scheme was treated as a concessional facility intended to give credit of duty paid on inputs against duty on finished goods. The Court accepted that there was nothing in the scheme to compel a manufacturer to remain under MODVAT for the whole financial year once the option had been exercised. The subsequent trade notice clarifying that opt-out could be permitted within the same financial year supported this construction. The Court also held that there was no estoppel against statute and that the restriction in the circular could not override the scheme as construed consistently with its object.

Conclusion: The manufacturer was entitled to opt out of the MODVAT scheme during the same financial year, and the circular denying that right was invalid to that extent.

Ratio Decidendi: An administrative circular cannot impose a restriction on a statutory concession scheme where the scheme itself contains no bar to opting out, and a manufacturer may withdraw from such a concession during the same financial year unless the statute or rules expressly prohibit it.

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