Strict construction of credit notifications: ceiling in the proviso did not extend to additional customs duty, so full Modvat credit was allowed.

A credit notification must be construed according to its own wording, and where different duties are identified in one part but omitted from a restrictive proviso, the omission is treated as deliberate. Here, the second proviso to paragraph 2 of Notification No. 177/86-C.E., as amended, referred only to duty of excise and special duty of excise, not to additional duty of customs under Section 3 of the Customs Tariff Act, 1975. The ceiling therefore did not extend to that customs duty, and full Modvat credit remained admissible. The ruling confirms that a credit restriction cannot be expanded beyond the duties expressly covered by the notification.

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Issues: Whether, under Notification No. 177/86-C.E. as amended by Notification No. 257/87, the ceiling of Rs. 800 per metric tonne in the second proviso to paragraph 2 applied only to the duty of excise and special duty of excise, or also extended to additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975.

Analysis: The notification separately identified the different duties in paragraph 1 and treated them collectively as specified duty for the purposes of the notification. The second proviso, however, did not use the collective expression specified duty and instead referred only to the duty of excise under the Central Excises and Salt Act, 1944 and the special duty of excise under the Finance Act. On a reading of the notification as a whole, the omission of the additional duty of customs from the second proviso was treated as deliberate and controlling. The language of the notification, and not any presumed policy outcome, governed the scope of the credit restriction.

Conclusion: The ceiling in the second proviso did not apply to additional duty of customs under Section 3 of the Customs Tariff Act, 1975, and full Modvat credit of that duty was admissible.

Final Conclusion: The departmental challenge to the appellate order failed because the notification restricted only the specified excise duties and did not curtail credit of additional customs duty.

Ratio Decidendi: Where a tax exemption or credit notification uses different expressions in different provisos, the Court must give effect to the precise language employed and cannot extend a restriction beyond the duties expressly covered by that provision.

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