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2015 (10) TMI 2404 - HC - Central ExciseMODVAT Credit - Availment on HSD - Held that - Rule 57A was substituted by notification dated 01.03.1997 but thereuneder also we do not find any substantial alteration so as to exclude HSD from being treated as input and to attract benefit of MODVAT credit. - Explanation to Rule 57A (Clause d) clearly takes within its ambit inputs used for generating electricity which is used within the factory of production for manufacture of final products or for any other product. It is not the case of Revenue that HSD used in the case in hand by assessee for generating electricity is not used within the factory of production for manufacture of final products or HSD is not used in generation of such electricity. The exclusion clause as it stood in explanation does not bring within its ambit HSD used for generation of electricity. - Decided in favour of assessee.
Issues:
Interpretation of Rule 57A of Central Excise Rules, 1944 regarding MODVAT credit on High Speed Diesel (HSD) as an input. Analysis: The judgment deals with the interpretation of Rule 57A of the Central Excise Rules, 1944, specifically regarding the eligibility of High Speed Diesel (HSD) as an input for claiming MODVAT credit. The dispute arose when M/s Ester India Ltd. claimed MODVAT credit for using HSD as fuel for generating electricity and manufacturing various items. The Assistant Commissioner denied the credit, stating that HSD was not an input as per Rule 57A. The matter escalated to the Tribunal, which ruled in favor of the assessee based on a precedent. The Revenue sought clarification from the High Court on two questions referred by the Apex Court. The first question revolved around whether HSD could be considered an input as per Section 'AAA' of Central Excise Rules, 1944 and Rule 57A. The second question focused on whether MODVAT credit could be allowed on HSD falling under Heading No. 27.10 of the Central Excise Tariff Act, 1985, which was excluded from MODVAT under Rule 57A. The Tribunal initially rejected the Revenue's application to refer the questions to the High Court, but the Apex Court intervened and directed the Tribunal to seek the High Court's opinion. The judgment analyzed Rule 57A and its applicability to the case at hand. It was noted that the Rule allowed credit for inputs used in manufacturing final products, including inputs used for generating electricity within the factory premises. The Court emphasized that the exclusion clause in the explanation of Rule 57A did not encompass HSD used for generating electricity within the factory for manufacturing final products. Consequently, both questions were answered in favor of the assessee and against the Revenue. In conclusion, the High Court's judgment clarified the eligibility of HSD as an input for claiming MODVAT credit under Rule 57A of the Central Excise Rules, 1944. The decision highlighted the specific provisions of the Rule and the application of the exclusion clause in determining the admissibility of credit for inputs used in the manufacturing process, ultimately ruling in favor of the assessee based on the interpretation of the law.
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