2000 (8) TMI 219 - AT - Central Excise

Tribunal affirms 10% Modvat credit limit for furnace oil under Rule 57B, clarifies non obstante clause

The Tribunal upheld the restriction on Modvat credit to 10% for furnace oil under Rule 57B, citing the impact of Notification No. 14/97 and the ... Modvat - Specified duty Issues:- Interpretation of Rule 57B regarding Modvat credit on inputs, specifically furnace oil- Applicability of Notification No. 14/97 restricting Modvat credit to 10%- Conflict between Rule 57A and Rule 57B in relation to specified duty- Effect of non obstante clause in Rule 57B on overriding other provisionsAnalysis:1. The case involved a dispute over Modvat credit on furnace oil under Rule 57B of the Central Excise Rules. The appellants argued for full credit while the Department contended that Notification No. 14/97 restricted the credit to 10%.2. The Ld. Commissioner (Appeals) allowed Modvat credit on furnace oil to the extent of 10% but rejected the imposition of an equivalent penalty, leading to multiple appeals being heard together.3. The main issue revolved around the restriction imposed by Notification No. 14/97 on Modvat credit for furnace oil. The appellants claimed full credit, arguing that Rule 57B, starting with a non obstante clause, made it independent of Rule 57A's restrictions.4. The appellant's consultant argued that Rule 57B's non obstante clause overrides Rule 57A, citing legal precedents supporting the interpretation of non obstante clauses to give overriding effect to certain provisions.5. The Department's submission highlighted that Rule 57B's non obstante clause pertains to inputs and specified duty, with the explanation under the rule clarifying the reference to Rule 57A for defining inputs.6. The Tribunal analyzed previous decisions and emphasized the need to refer to Rule 57A for understanding specified duty, ultimately concluding that Modvat credit on furnace oil was limited to 10% as per the Notification.7. The Tribunal distinguished previous cases where non obstante clauses were interpreted differently, emphasizing the specific context of the present case regarding specified duty under Rule 57B.8. After considering the arguments and legal precedents, the Tribunal upheld the restriction on Modvat credit to 10% for furnace oil, finding no legal or factual infirmity in the impugned order and rejecting the appeals.This detailed analysis of the judgment clarifies the legal interpretation of Rule 57B, the impact of Notification No. 14/97, and the significance of non obstante clauses in resolving the dispute over Modvat credit on furnace oil.