1997 (8) TMI 150 - AT - Central Excise

Summary

Issues:
1. Eligibility of HSD oil for Modvat credit under Rule 57G of the Central Excise Rules, 1944.

Analysis:
The Appellant, engaged in the manufacture of cement, sought Modvat credit on HSD oil used in their captive power generation plant. The Assistant Commissioner denied the benefit based on Notification No. 8/95, excluding HSD oil from specified inputs. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

Rule 57A outlines the applicability of the Modvat Scheme, stating that it applies to finished goods specified by the Government for allowing credit on excise duty paid on inputs used in manufacturing. Initially, HSD oil was not listed as an eligible input until Notification No. 8/95, which excluded it. However, an amendment through Notification No. 11/95 introduced a proviso allowing credit for inputs used in electricity generation within the factory, regardless of the Notification's exclusions.

The crux of the matter lies in the apparent conflict between Notification No. 8/95 and the second proviso of Rule 57D introduced by Notification No. 11/95. While the former excludes HSD oil without specifying its usage, the latter allows credit for inputs used in electricity generation within the factory. The Tribunal opined that the proviso in Rule 57D prevails over the exclusion in Notification No. 8/95, making HSD oil eligible for Modvat credit if it meets the conditions of the proviso.

In conclusion, the Tribunal set aside the previous order, ruling in favor of the Appellant, stating that HSD oil, if meeting the conditions of the proviso in Rule 57D, is eligible for Modvat credit, despite the exclusion in Notification No. 8/95.