Cenvat credit on HSD fuel for a 100% EOU was upheld where notification-based deemed export treatment applied.

A 100% export oriented unit was entitled to Cenvat credit on High Speed Diesel Oil used for manufacturing operations and for generating electricity for captive consumption. The analysis treated supplies to EOUs as deemed exports under the relevant notifications and noted that those notifications specifically covered EOUs and fuel. Because the Revenue did not effectively dislodge the findings based on that notification scheme, it could not deny credit merely by characterising HSD as an inadmissible input under the Cenvat Credit Rules. The credit was therefore available to the assessee and the Revenue's challenge failed.

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Issues: Whether a 100% Export Oriented Unit was entitled to Cenvat credit on High Speed Diesel Oil used as fuel, and whether the Revenue could deny such credit by treating HSD as an inadmissible input under the Cenvat Credit Rules.

Analysis: The respondents were a 100% EOU and the disputed credit related to HSD Oil used for manufacturing operations and generation of electricity for captive consumption. The order relied on the relevant notifications governing EOUs and fuel, and on the scheme under which supplies to EOUs are treated as deemed exports. Since the notifications specifically covered EOUs and fuel, and the Revenue did not effectively challenge the findings based on those notifications, there was no basis to exclude the credit merely on the general objection under the Cenvat Credit Rules.

Conclusion: The respondents were entitled to avail the Cenvat credit, and the Revenue's appeal failed.

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