Cenvat credit exclusion for LDO and HSD bars input credit even when used in electricity generation.

The Cenvat Credit Rules treated inputs and capital goods separately and expressly excluded HSD, motor spirit, and, from 01.03.2003, LDO from the definition of input. That exclusion meant these fuels could not be treated as inputs for Cenvat credit purposes, even when used in electricity generation. Their actual use did not override the statutory exclusion, because items specifically taken out of the definition could not be brought back by manner of use. Accordingly, LDO and HSD were not eligible for Cenvat credit on merits.

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Issues: Whether LDO and HSD were eligible as inputs for availing Cenvat credit after their exclusion from the definition of input.

Analysis: The applicable Cenvat Credit Rules defined inputs and capital goods separately. HSD and motor spirit were specifically excluded from the definition of input, and LDO was added to the exclusion list by Notification No. 13/2003-C.E. (N.T.) dated 01.03.2003. The exclusion operated from 01.03.2003 and made clear that LDO, HSD and motor spirit were not to be treated as inputs for any purpose. Mere use of these items in generation of electricity did not overcome the express statutory exclusion, since usage could not bring back into the definition what the rules had specifically taken out.

Conclusion: LDO and HSD were not eligible for Cenvat credit, irrespective of their use, and the appeal failed on merits.

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