Modvat credit for diesel used to generate factory electricity remained available before the Rule 57B amendment.

Unamended Rule 57B permitted Modvat credit on duty-paid goods used for generation of electricity or steam consumed in the factory for manufacture of the final product or for any other purpose within the factory. On that plain language, high speed diesel oil used as fuel for generating electricity within the factory qualified for credit until the amendment of 2-3-1998 introduced a clarification narrowing the scope of "inputs" to goods specified under Rule 57A. The legal position therefore was that credit remained admissible for such diesel oil for the pre-amendment period, and the appeal was decided against the assessee.

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Issues: Whether Modvat credit was admissible on high speed diesel oil used as fuel for generation of electricity consumed within the factory for manufacture of the final product, prior to the amendment of Rule 57B.

Analysis: Unamended Rule 57B allowed credit of duty paid on goods used for generation of electricity or steam used for manufacture of the final product or for any other purpose within the factory of production. The amendment introduced on 2-3-1998 inserted a clarification restricting the term "inputs" to those specified in a notification under Rule 57A. On the plain language of the unamended rule, the benefit was available until the amendment took effect.

Conclusion: Modvat credit on high speed diesel oil used for generation of electricity within the factory was admissible until Rule 57B was amended, and the appeal was against the assessee.

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