Modvat credit on high speed diesel oil required reference to High Court; Tribunal's refusal was set aside

The Supreme Court held that the Tribunal erred in refusing to refer the framed questions to the High Court. The questions concerned whether high speed diesel oil could qualify as an input under Rule 57A of the Central Excise Rules, 1944 and whether Modvat credit was available for goods falling under Heading 27.10 of the Central Excise Tariff Act, 1985. Because these issues required reference on the stated questions, the Tribunal's refusal was set aside and it was directed to make the reference.

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Issues: Whether the Tribunal was justified in declining to make a reference to the High Court on the questions relating to eligibility of high speed diesel oil as input and allowability of Modvat credit under the Central Excise regime.

Analysis: The Court found that the Tribunal ought not to have refused reference. The questions proposed involved the treatment of high speed diesel oil as an input within the scheme of Rule 57A of the Central Excise Rules, 1944 and the availability of Modvat credit in respect of goods falling under Heading No. 27.10 of the Central Excise Tariff Act, 1985. Since the matter required reference on the framed questions, the Tribunal's refusal was held to be erroneous.

Conclusion: The refusal to make a reference was set aside and the Tribunal was directed to refer the stated questions to the High Court.

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