Modvat credit on diesel for captive power was unavailable under the excise rules and retrospective amendment.

Modvat credit was not available on high speed diesel oil used to generate captive power for a cement plant because Rule 57B of the Central Excise Rules, 1944 did not cover that input. The Finance Act, 2000 retrospectively denied such credit from 16 March 1995 and validated past action, and the Supreme Court upheld that amendment. As a result, diesel used for captive power generation could not qualify for Modvat credit under the governing excise framework.

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Issues: Whether the assessee was entitled to Modvat credit on high speed diesel oil used for generating captive power for its cement plant.

Analysis: High speed diesel oil used in generating power for manufacture could be treated as an input in a broad sense, but entitlement to Modvat credit depended on the governing rule. Rule 57B of the Central Excise Rules, 1944 did not include high speed diesel oil among the goods qualifying for credit, and the statutory amendment in Section 112 of the Finance Act, 2000 denied such credit with retrospective effect from 16 March 1995 and validated past action. The Supreme Court had upheld the validity of the amendment, removing any uncertainty on the issue.

Conclusion: The assessee was not entitled to Modvat credit on high speed diesel oil used for captive power generation.

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