Cenvat credit utilisation under Rule 57F(12) permits cross-use of specified duty credit despite general restriction

Rule 57F(12) created a specific enabling exception to the general restriction under Rule 57A and Notification No. 5/94 on using credit only within the same duty category. Where the proviso's conditions are met, credit of specified duty on an input received and used in the factory on or after 1 March 1997 may be used for duty on another final product, even if the input was not used in that product. On the stated facts, credit of Additional Excise Duty on tyre cord fabric could validly be used against Basic Excise Duty on tubes, so the demand and penalty could not survive.

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Issues: Whether credit of Additional Excise Duty taken on tyre cord fabric could be utilised for payment of Basic Excise Duty on tubes under Rule 57F(12) of the Central Excise Rules, 1944 despite Notification No. 5/94.

Analysis: Rule 57A and Notification No. 5/94 restricted utilisation of credit to the same category of duty, but Rule 57F(12) contained a non obstante clause and an enabling proviso permitting credit of specified duty on any input to be used towards duty on any other final product, whether or not the input was actually used in that final product, if the input had been received and used in the factory on or after 1 March 1997. The inputs had been received and used within the relevant period, and the credit taken was of Additional Excise Duty on tyre cord fabric, while the credit was utilised for Basic Excise Duty on tubes. The requirements of the proviso were therefore satisfied.

Conclusion: The assessee was entitled to utilise the credit in the manner adopted, and the demand and penalty could not survive.

Ratio Decidendi: Where the conditions of the proviso to Rule 57F(12) are satisfied, the credit of specified duty on an input may be utilised for duty on another final product notwithstanding the general restriction in Rule 57A and the notification issued thereunder.

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