Retrospective application of Rule 57B amendment denied; modvat credit on HSD oil remained available for the prior period.

The Explanation inserted in Rule 57B by Notification No. 5/98 was held to operate only from the date of its publication in the Official Gazette and not retrospectively. It confined the term "input" to inputs specified in a notification issued under Rule 57A, and the amendment was not treated as merely clarificatory. As the notification itself fixed its effective date and earlier Tribunal authority had already taken the same view, the assessee remained entitled to modvat credit for the period before the amendment, and the Revenue's challenge failed.

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Issues: Whether the Explanation inserted in Rule 57B of the Central Excise Rules, 1944 by Notification No. 5/98 dated 02.03.1998 operated retrospectively so as to deny modvat credit on HSD oil for a period prior to its introduction.

Analysis: The Explanation was introduced by the notification with effect from the date of its publication in the Official Gazette. The legal effect of the amendment was to confine the expression "input" in Rule 57B to inputs specified in a notification issued under Rule 57A. Since the notification itself stipulated its effective date, the amendment could not be treated as merely clarificatory so as to apply backwards. The issue stood covered by earlier Tribunal authority holding the amendment to be prospective.

Conclusion: The Explanation to Rule 57B was prospective and did not apply to the period in dispute; the assessee was entitled to modvat credit and the Revenue's appeal failed.

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