Modvat credit on generating sets remains available where a later specific entry does not cut down an earlier general entitlement.

Modvat credit remained available for a generating set used in the factory under Rule 57Q(1)(c), because that clause originally covered generating sets without any capacity limit. The later insertion of a specific entry for electric generating sets exceeding 75 KVA did not amend or curtail the earlier general entry, and the record did not clearly establish that the equipment was an electric generating set. The subsequent notification also indicated that no restriction was intended against generating sets under the earlier clause. Credit was therefore admissible, and denial based on 35 KVA capacity was unjustified.

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Issues: Whether Modvat credit was admissible on generating sets under Rule 57Q of the Central Excise Rules, 1944, despite the insertion of a later clause covering electric generating sets of output exceeding 75 KVA.

Analysis: Rule 57Q(1)(c), as introduced by Notification No. 4/94-C.E. dated 01.03.1994, expressly covered generating sets used in the factory of the manufacturer without any capacity restriction. Notification No. 11/95-C.E. dated 16.03.1995 inserted clause (d)(v), which dealt with electric generating sets exceeding 75 KVA, but it did not amend or curtail clause (c). The record referred only to a generating set, and there was no clear finding that it was an electric generating set. The later insertion therefore could not be read as taking away the pre-existing eligibility under clause (c). Notification No. 14/96-C.E. (N.T.) dated 23.07.1996 also indicated that no restriction was intended to operate against generating sets under the earlier clause.

Conclusion: Modvat credit on the generating set was admissible, and denial of credit on the ground of 35 KVA capacity was unjustified. The departmental appeal failed.

Ratio Decidendi: A later, more specific entry inserted into an eligibility provision does not restrict an existing unqualified entry unless the earlier entry is expressly amended or withdrawn.

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