Clarificatory Modvat credit amendment under Rule 57E operates retrospectively for duty variation on inputs.

An amendment to Rule 57E of the Central Excise Rules concerning variation of Modvat credit on additional duty paid on inputs was treated as clarificatory and procedural, not substantive. The text states that the amendment supplied a mechanism for adjustment, refund, or recovery of credit where duty on inputs varied after clearance, consistent with the larger bench view that such adjustment was implicit in Rule 57G. On that basis, the amendment was described as retrospective in operation, subject to proof of the actual duty variation on the inputs, and the credit relief claimed was stated to be admissible.

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Issues: Whether the amendment to Rule 57E of the Central Excise Rules, dealing with variation of Modvat credit on account of additional duty paid on inputs, was retrospective and applicable to the dispute.

Analysis: The dispute concerned denial of Modvat credit where additional duty had been paid on inputs after clearance. The earlier and amended versions of Rule 57E were considered along with the larger bench view that the mechanism for adjustment, refund, or recovery of credit on variation of duty was implicit in Rule 57G. The amendment to Rule 57E was treated as clarificatory and procedural, and therefore retrospective, subject to satisfaction regarding the actual variation of duty on the inputs.

Conclusion: The amendment applied retrospectively, and the appellant was entitled to the credit relief claimed. The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: An amendment that merely clarifies or supplies a procedural mechanism for adjustment of Modvat credit on variation of duty is retrospective in operation.

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