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of <h1>Duty-paid high speed diesel as MODVAT/CENVAT input credit u/rr 57A/57B-notifications excluded HSD, credit denied.</h1> The dominant issue was whether duty-paid High Speed Diesel (HSD) qualified as an eligible input for MODVAT/CENVAT credit during 16.3.1995-1.4.2000 under ... Retrospective amendment - legislative intention - Cenvat / Modvat Credit on HSD - period 16.3.1995 to 1.4.2000 - applicability of notification issued under Rule 57A - Whether the appellants are entitled to credit of duty paid on High Speed Diesel oil at any time during the period commencing on and from 16th March, 1995 and ending with the day of Finance Act, 2000 which received assent of the President on 1st April, 2000 - Held that:- The contention that the provisions of Rule 57B prevails over Rule 57A and consequently the inputs enumerated under Rule 57B would be inputs for the availment of MODVAT credit in spite of any provision to the contrary which may be contained in Rule 57A, is misreading of the provisions, for in our considered opinion, the aforesaid explanation added to the Notification No. 5/98 dated 2.3.1998, clearly intends that the inputs mentioned in Rule 57B refers only to such inputs as specified in a notification issued under Rule 57A. In our considered opinion the intention of the legislature is clear from the beginning to exclude the benefit of such credit by excluding high speed diesel oil from the list of eligible inputs by making substantial exclusion thereof in the notifications referred to hereinbefore. Since the product High Speed Diesel oil was excluded specifically from the list of eligible inputs in the notifications, there was no question of creation of any right in favour of the appellant to avail such benefit. Therefore, contention that a vested or accrued right is sought to be taken away by giving retrospective effect is without any merit. Consequently, in the facts of this case we are not required to answer whether a vested or accrued right could be taken away with retrospective effect. Further on a conjoint reading of all the notifications it is clearly established that the intention of the Government all along was to exclude the appellants from getting the benefit of the MODVAT credit, therefore, the contentions that the Finance Act violates the vested right is without any basis. The various decisions referred to and relied upon by the counsel appearing for the appellants in support of his contention that the vested right created in their favour could not have been divested by the respondent retrospectively is found to be based on misreading of the language of the aforesaid notifications which do not support, but in fact destroy the very basis of the case of the appellants. - No credit on HSD. Issues: Whether the appellants are entitled to credit of duty paid on High Speed Diesel (HSD) oil at any time during the period commencing on and from 16th March, 1995 and ending with the day the Finance Act, 2000 received the assent of the President (1st April, 2000).Analysis: The entitlement to MODVAT credit is governed by Rule 57A (specifying eligible inputs by notification), Rule 57B (eligibility of credit) and related provisos and notifications. Notification No. 5/94-CE(NT) (01.03.1994) and Notification No. 8/95-CE(NT) (16.03.1995) expressly excluded high speed diesel oil from the list of eligible inputs. Amendments to Rule 57D and subsequent notifications (including Notification No. 11/95-CE(NT) and Notification No. 5/98-CE(NT)) clarified and constrained the scope of Rule 57B, indicating that 'inputs' for the purposes of Rule 57B are only those specified under Rule 57A. The Finance Act, 2000 (notably Section 112 and Clause 108) effected a legislative clarification/validation denying MODVAT credit on HSD for the period 16.03.1995 to the date of assent. The Court examined the notifications collectively and previous decisions of this Court, and concluded that HSD was consistently excluded by notification from eligible inputs, so no vested or accrued right to MODVAT credit on HSD had arisen that could be divested by retrospective legislative action.Conclusion: Against the assessee.
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