Strict construction of subsidy credit limits benefit to oil actually hydrogenated, not to pre-processing losses or excess drawal.

Money credit under Notification No. 45/89-C.E. (N.T.) was confined to the quantity of oil actually subjected to hydrogenation, because the notification expressly linked eligibility to that process and to the date of hydrogenation. The scheme was treated as a subsidy requiring strict construction, so the benefit could not be extended by implication to oil lost during earlier refining or pre-hydrogenation stages. Rule 57M could not enlarge the notification, and an affidavit in another context did not create estoppel against law. On that interpretation, credit beyond the hydrogenated quantity was ineligible and reversal was required.

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Issues: Whether money credit under Notification No. 45/89-C.E. (N.T.) was available on the entire quantity of raw oil drawn for processing before hydrogenation, or only on the quantity of oil actually subjected to hydrogenation.

Analysis: The notification, issued under Rule 57K of the Central Excise Rules, 1944, expressly limited credit to the quantity of oil or fat subjected to hydrogenation and permitted credit only on the date of such hydrogenation. The scheme was treated as a monetary subsidy and, unlike Modvat, was held to be amenable to strict construction. The earlier exemption notification was also read as showing the same legislative intention, namely, to extend the benefit only to the quantity of minor oil present immediately before hydrogenation. Rule 57M could not enlarge the notification so as to cover losses occurring at the pre-hydrogenation refining stage. The affidavit relied upon by the assessee did not create an estoppel, as the issue there was different and no estoppel can operate against law.

Conclusion: Credit was confined to the quantity actually subjected to hydrogenation and not to the entire raw oil drawn for preliminary processing.

Final Conclusion: The appeals failed because the claimed credit exceeded the quantity eligible under the notification, and the demands for reversal were sustained.

Ratio Decidendi: A subsidy or credit notification must be construed strictly according to its express conditions, and where it limits credit to the quantity actually subjected to the specified process, the benefit cannot be extended to pre-process or pre-condition losses by implication.

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