1998 (7) TMI 195 - AT - Central Excise

Summary

Issues:
1. Whether Modvat credit is admissible to HSD oil under Rule 57D as an input under Rule 57A?
2. Interpretation of conflicting Notifications 8/95 and 11/95 regarding the eligibility of Modvat credit for HSD oil used for electricity generation.

Issue 1:
The Appellate Tribunal considered the Revenue's plea for reference to the High Court regarding the admissibility of Modvat credit to HSD oil under Rule 57D as an input under Rule 57A. The Tribunal had allowed the benefit of Modvat credit to HSD oil under Notification No. 5/94 as amended by Notification 8/95, which excluded HSD oil as an input. The Tribunal found that the exclusion under Notification 8/95 did not preclude granting the benefit, as another Notification 11/95 issued on the same day allowed Modvat credit for inputs used for electricity generation. The Tribunal held that the second proviso under Rule 57D, specifically for inputs used for electricity generation, prevails over the exclusion under Notification 8/95. Therefore, HSD oil meeting the conditions in the second proviso of Rule 57D would be eligible for Modvat credit.

Issue 2:
The Tribunal examined the conflicting Notifications 8/95 and 11/95 regarding the eligibility of Modvat credit for HSD oil used for electricity generation. Notification 8/95 excluded HSD oil from Modvat credit without specifying the purpose of use, rendering it ineligible for any product manufacturing. However, the second proviso under Rule 57D allowed credit for inputs used for electricity generation within the factory. The Tribunal harmoniously interpreted both notifications, holding that the exclusion under Notification 8/95 does not apply to inputs used for electricity generation as per the second proviso of Rule 57D. The Tribunal clarified that a harmonious reading of the notifications is not a question of law for reference to the High Court, rejecting the need for such reference. Consequently, the reference application was rejected.

In conclusion, the Tribunal's judgment clarified the eligibility of Modvat credit for HSD oil under conflicting notifications, emphasizing the importance of the specific purpose of use and the second proviso under Rule 57D for inputs used for electricity generation. The decision highlighted the need for a contextual interpretation of notifications to determine the admissibility of Modvat credit, ultimately resolving the issue without the necessity of a High Court reference.