1999 (2) TMI 162 - AT - Central Excise

Summary

Issues Involved: Eligibility of high speed diesel oil as an input for Modvat credit under Rule 57A of the Central Excise Rules, 1944.

Analysis:
1. The issue in this appeal pertains to the eligibility of high speed diesel oil used as fuel for generating electricity for the manufacture of polyester chips and films for Modvat credit under Rule 57A of the Central Excise Rules, 1944. The Assistant Commissioner of Central Excise denied credit on the basis that high speed diesel oil was not covered as an input under Rule 57A read with Notification 5/94-C.E., dated 1-3-1994. The Commissioner (Appeals) upheld this decision, stating that as per a corrigendum dated 10-3-1997, credit under Rule 57B would only be admissible if the input is specified under Rule 57A, and since high speed diesel oil was not listed as an input under Rule 57A, it could not be considered an input under Rule 57B, leading to the appeal.

2. During the hearing, it was argued that Modvat credit should be available for high speed diesel oil used for electricity generation, citing a previous Tribunal order in the case of India Cements Ltd. v. C.C.E., Hyderabad. In that case, it was established that high speed diesel oil, despite being classified under Heading 27.10, was eligible for credit under Rule 57D provisos, specifically when used for electricity generation within the factory premises for manufacturing final products. Since the appellants in the current case also used high speed diesel oil for electricity generation for manufacturing their final products, the Tribunal applied the same rationale and allowed the appeal, setting aside the impugned order.

3. The argument presented by the learned DR regarding the interpretation of "specified duty" was deemed a new plea and not the basis for denying credit in the impugned order. Furthermore, the contention that Notification 5/98 would bar taking credit on high speed diesel oil as a non-specified input was rejected, as the Notification itself clarified that it would come into force on the date of its publication in the official Gazette. Therefore, the Tribunal allowed the appeal, confirming the eligibility of high speed diesel oil for Modvat credit under Rule 57A.

In conclusion, the Tribunal's decision in this case established the eligibility of high speed diesel oil as an input for Modvat credit under Rule 57A, aligning with previous rulings and clarifying the application of relevant provisions and notifications.