Strict construction of exemption-style notifications kept residual fuel oil outside the Modvat credit restriction.

Residual fuel oil was held not to fall within Notification No. 14/97-C.E. (N.T.) for purposes of restricting Modvat credit because the notification expressly listed only specified fuels and did not mention RFO. Applying strict construction, the omission of RFO was treated as significant, and neither shared chapter classification nor similar BIS specifications was sufficient to extend the restriction to an unenumerated product. The notification was therefore construed as inapplicable to RFO, with the result that the Modvat credit restriction did not apply.

---

---

Issues: Whether residual fuel oil (RFO) was covered by Notification No. 14/97-C.E. (N.T.) so as to restrict Modvat credit.

Analysis: The notification specifically named naphtha, furnace oil, low sulphur heavy stock, light diesel oil, bitumen and paraffin wax. Applying strict construction, the omission of RFO from the named inputs was held to be significant. The fact that RFO may fall under the same chapter heading as other fuels, or may have similar BIS specifications, was held insufficient to extend the restriction to a product not expressly included in the notification.

Conclusion: RFO was not covered by the notification and the restriction on Modvat credit did not apply; the assessee succeeded.

---