Prospective operation of excise amendment bars capital goods credit for Heading 84.74 items received before notification.

Capital goods credit on spares, components and accessories of machines under Heading 84.74 was examined in relation to Notification No. 25/96-C.E. (N.T.) and Rule 57Q. The Tribunal applied the settled principle that a statutory amendment operates prospectively unless retrospective effect is expressly or impliedly provided, and held that the notification gave no indication of retrospective operation. It also noted that the earlier Tribunal decision relied on below did not lay down a clear ratio on retrospectivity. Accordingly, the amendment adding Heading 84.74 by substitution could not be applied to goods received before the notification took effect, and credit was held inadmissible for that earlier period.

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Issues: Whether capital goods credit was admissible on spares, components and accessories of machines falling under Heading 84.74 received during the period 23-7-96 to 31-8-96, in view of Notification No. 25/96-C.E. (N.T.) dated 31-8-96 and Rule 57Q of the Central Excise Rules.

Analysis: The lower appellate authority had treated the amendment brought in by Notification No. 25/96-C.E. (N.T.) as retrospective on the basis of an earlier Tribunal decision. The Tribunal found that the earlier decision did not record any clear ratio on retrospectivity and therefore could not be treated as a precedent on that point. It applied the settled principle that a statutory amendment operates prospectively unless retrospective effect is expressly or impliedly provided. Since the notification contained no indication of retrospective operation, and the addition of Heading 84.74 was made by substitution of the relevant sub-clause, the amendment could not be given retrospective effect.

Conclusion: Capital goods credit was not admissible for goods of Heading 84.74 received before the notification took effect. The appeal succeeded and the departmental stand was accepted.

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