2007 (11) TMI 491 - AT - Central Excise

Summary

Issues:

1. Interpretation of Modvat credit entitlement under Notification No. 5/94-C.E. (N.T.) as amended by Notification No. 14/97-C.E. (N.T.)
2. Applicability of Rule 57B and Rule 57D for availing Modvat credit
3. Benefit of Modvat credit for the period prior to 1-3-97

Analysis:

1. The case involved a dispute regarding the entitlement of Modvat credit to the extent of 15% ad valorem on Light Diesel Oil (LDO) used as fuel for generating electricity for manufacturing final products within the factory. The relevant Notifications and Finance Act provisions restricted the admissible credit to 10% ad valorem. The lower appellate authority favored the assessee for the period from 1-3-97, citing Rule 57B, which allowed Modvat credit despite the restriction under Rule 57A.

2. The Tribunal analyzed Rule 57B and found that Modvat credit was admissible for inputs used in generating electricity for manufacturing final products even for the period from 1-3-97. The appellate authority's decision on this legal position was unchallenged by the department. Therefore, the Tribunal concluded that the Revenue could not deny the benefit of the relevant proviso under Rule 57D to the assessee for the period prior to 1-3-97. This decision was reached after considering submissions from both sides.

3. Consequently, the Tribunal ruled in favor of the assessee, granting a waiver of pre-deposit and stay of recovery concerning the duty amount. The judgment was dictated and pronounced in open court, providing clarity on the interpretation of Modvat credit entitlement and the application of relevant rules for availing such benefits in the given scenario.