Specific proviso on electricity generation inputs prevails over general Modvat exclusion for HSD oil eligibility.

HSD oil used to generate electricity within the factory was treated as eligible for Modvat credit where the second proviso to Rule 57D applied, even though Notification No. 8/95 generally excluded HSD oil from eligible inputs. The provisions were read as operating in different fields: Rule 57A and the exclusion notification governed general input eligibility, while the proviso created a specific entitlement for inputs used in electricity generation within the factory for manufacture of final products or other use. The specific proviso was therefore treated as prevailing to that extent over the broader exclusion.

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Issues: Whether HSD oil used as an input for generation of electricity within the factory was eligible for Modvat credit despite its exclusion under Notification No. 8/95, in view of the second proviso to Rule 57D introduced by Notification No. 11/95.

Analysis: Rule 57A made Modvat credit available only in respect of specified inputs and specified final products. Notification No. 8/95 excluded HSD oil from the list of eligible inputs. However, the second proviso to Rule 57D, inserted on the same date, expressly allowed credit of specified duty on inputs used for generation of electricity used within the factory of production for manufacture of final products or for any other purpose. The two provisions were read as operating in different fields, and the proviso was treated as giving a specific entitlement for inputs used in electricity generation, overriding the general exclusion in the notification to that extent.

Conclusion: HSD oil, if used for generation of electricity and satisfying the conditions of the second proviso to Rule 57D, was held eligible for Modvat credit notwithstanding its exclusion in Notification No. 8/95.

Ratio Decidendi: A specific statutory proviso allowing credit for inputs used in generating electricity within the factory prevails over a general notification excluding that input from Modvat eligibility.

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