Self-contained Modvat credit provision overrides Rule 57A restrictions for furnace oil input credit

Rule 57B of the Central Excise Rules operated as a self-contained Modvat provision with a non obstante clause, so credit on furnace oil had to be determined from its own text rather than by importing Rule 57A(3) restrictions or the notifications issued under that rule. After the 02.06.1998 amendment, the provision allowed credit of 95% of the duty shown on the duty-paid documents, subject to the proviso governing inputs received up to the specified date. The departmental attempt to curtail credit by applying Rule 57A limitations was rejected, and the assessee's claim to the prescribed credit was upheld.

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Issues: Whether, under Rule 57B of the Central Excise Rules, 1944, credit on furnace oil used as input was limited by the restrictions contained in Rule 57A(3) and the related notifications, or whether the assessee was entitled to credit of 95% of the duty shown on the duty-paid documents.

Analysis: Rule 57B is a self-contained provision within the Modvat scheme and opens with a non obstante clause. Its text, as applicable after the amendment dated 02.06.1998, allowed credit of ninety-five per cent of the specified duty paid on the input, and the proviso further indicated credit to the extent of duty paid on inputs received up to the specified date. The restriction mechanism in Rule 57A(3), and the notifications issued under that provision, were treated as confined to Rule 57A and not automatically carried into Rule 57B. The post-amendment language of Rule 57B showed that credit had to be determined with reference to the duty shown on the documents, and the departmental attempt to reduce the credit by importing the Rule 57A restrictions was not accepted.

Conclusion: The assessee's claim was upheld and the departmental restriction on credit beyond 95% of the duty shown on the documents was rejected.

Ratio Decidendi: Where a later rule is framed as a self-contained provision with a non obstante clause and its text specifically governs the extent of credit, restrictions attached to a different rule do not apply unless expressly incorporated.

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