Modvat credit for petroleum products used in electricity generation applied under Rule 57B, with period-based credit rates affirmed.

Under the amended Rule 57B, petroleum products used in generating electricity qualified as eligible inputs for Modvat credit, following a later binding decision that settled the rule's scope. The admissible credit varied by period: actual duty paid up to 2 June 1998 and 95% of the duty paid thereafter. The earlier denial of credit was therefore unsustainable, and entitlement to credit was affirmed for both relevant periods.

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Issues: Whether the assessee was entitled to credit under Rule 57B of the Central Excise Rules, 1944 on petroleum products used in generating electricity, and if so, the rate of credit applicable for the relevant periods before and after 2 June 1998.

Analysis: The appeals arose under Section 35-L(b) of the Central Excise Act, 1944. The Tribunal had denied the benefit by following an earlier view, but that view had already been reversed by the Court. In light of the later binding decision, petroleum products used as inputs for generation of electricity qualified for credit under Rule 57B as amended. The admissible credit differed by period: actual duty paid up to 2 June 1998 and 95% of the duty paid thereafter.

Conclusion: The assessee was entitled to take credit on the petroleum products used in generation of electricity for the stated periods, at the applicable rates specified by the amended rule.

Final Conclusion: The impugned denial of credit was set aside and the assessee's entitlement to Modvat credit was affirmed for both relevant periods.

Ratio Decidendi: Where a later binding decision has settled the scope of Rule 57B, petroleum products used in the generation of electricity are eligible inputs for credit to the extent permitted by the amended rule for the relevant period.

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