Transitional Modvat credit confined to inputs in stock as such; omitted rule language could not be expanded by interpretation.

After deletion of clause (ii) from Rule 57H(1), transitional Modvat credit was confined to inputs lying in stock as such or received after filing the Rule 57G declaration. The retained text could not be extended to inputs already consumed and embedded in finished goods lying in stock, because an omitted provision cannot be read back into the rule to enlarge the concession. The later re-insertion of the deleted clause by notification was treated as non-retrospective and did not revive the intervening period. Transitional credit on the input content of finished goods in stock was therefore not admissible.

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Issues: Whether, after deletion of clause (ii) of Rule 57H(1), Modvat credit could still be granted on the input content of finished goods lying in stock on the date the assessee opted for the Modvat scheme.

Analysis: Rule 57H, as amended with effect from 05-05-1989, retained only the facility for inputs lying in stock as such or received in the factory after filing the declaration under Rule 57G. The deleted clause earlier extended transitional benefit to inputs used in the manufacture of final products cleared on or after 01-03-1987. Once that clause was omitted, the remaining language could not be expanded to cover inputs already consumed and embedded in finished goods in stock. The expression "inputs lying in stock" was held to apply only to inputs available as such, and an omitted provision could not be supplied back into the statute by interpretation. The later re-insertion of the deleted clause by Notification No. 28/91-C.E. (N.T.) dated 25-07-1991 did not operate retrospectively to revive the intervening period.

Conclusion: Transitional Modvat credit was not admissible on the input content of finished goods lying in stock, and the assessee was not entitled to the broader credit claimed.

Final Conclusion: The appeal succeeded, the appellate order granting the larger credit was set aside, and the Assistant Collector's restricted credit determination was restored.

Ratio Decidendi: After deletion of a specific transitional clause in a fiscal scheme, credit cannot be extended by interpretation to cover situations no longer within the retained statutory text, and an omitted provision cannot be read back into the rule to enlarge the concession.

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