Modvat credit on capital goods follows the law on receipt; later removal of the 75% cap does not apply retrospectively.

For capital goods imported under project import, the admissible Modvat credit is determined by the law in force on the date the goods are received in the factory, not by the date of installation or later actual availment. A prospective amendment removing the 75% restriction under Rule 57Q did not create retrospective entitlement to 100% credit for goods already received when the lower ceiling applied. The stated principle is that the quantum of credit accrues with receipt of the goods, and a later beneficial amendment cannot enlarge that vested entitlement for earlier receipts.

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Issues: Whether, for capital goods imported under project import, the quantum of Modvat credit admissible was to be determined with reference to the date of receipt of the goods in the factory or the date of installation / actual availment of credit, where the restrictive 75% cap under Rule 57Q stood removed by Notification No. 11/2000-C.E. (N.T.).

Analysis: The relevant legal position was that eligibility to capital goods credit accrued on receipt of the goods in the factory, but the quantum of credit had to be tested with reference to the law in force on that date. The amendment by Notification No. 11/2000-C.E. (N.T.) removing the 75% restriction operated prospectively and did not confer retrospective entitlement to 100% credit on goods already received when the lower ceiling was in force. The cited precedent line was followed to hold that installation date did not control the quantum admissible where the entitlement had already arisen on receipt.

Conclusion: The credit was correctly restricted to 75% because the goods were received when that limit applied, and the assessee was not entitled to 100% credit on the basis of the later amendment.

Ratio Decidendi: The quantum of Modvat credit on capital goods is governed by the law in force on the date the goods are received in the factory, and a subsequent prospective amendment enhancing the credit cannot enlarge the entitlement for goods received earlier.

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