Modvat credit on refractory bricks upheld as a clarificatory amendment to Rule 57Q applied retrospectively.

Refractory bricks used in a furnace were treated as eligible for Modvat credit under Rule 57Q because they fell within the general definition of capital goods in clauses (a), (b) and (c). Notification No. 11/95-C.E. (N.T.), which inserted clause (d), was viewed as a clarificatory amendment introduced by way of abundant caution to settle an existing controversy, and was therefore applied retrospectively. The Tribunal's earlier view remained undisturbed, as no higher forum reversal was shown, and credit on the refractory bricks was sustained.

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Issues: Whether refractory bricks used in a furnace were eligible for Modvat credit under Rule 57Q, and whether Notification No. 11/95-C.E. (N.T.) introducing clause (d) to Rule 57Q operated retrospectively as a clarificatory amendment.

Analysis: The order under challenge followed an earlier Tribunal view that refractory bricks were already covered by the general definition of capital goods under clauses (a), (b) and (c) of Rule 57Q, and that clause (d) was inserted only by way of abundant caution to settle the controversy. On that basis, the notification was treated as clarificatory in nature and given retrospective effect. The Revenue did not show that the earlier Tribunal decision had been reversed by any higher forum.

Conclusion: The retrospective treatment of the notification was upheld and the respondents' entitlement to Modvat credit on refractory bricks was sustained.

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