Modvat credit on diesel used for captive electricity generation was held inadmissible under Rule 57A.

Modvat credit was held inadmissible on light diesel oil used as fuel in a generator for captive generation of electricity under Rule 57A of the Central Excise Rules, 1944. The Tribunal followed prior authority that oil consumed for generating electricity does not qualify as an eligible input, and it rejected the assessee's factual distinction as inapplicable. On that basis, the credit claim failed and the matter was decided in favour of the Revenue.

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Issues: Whether Modvat credit was admissible on light diesel oil used in a generator for the generation of electricity.

Analysis: The light diesel oil was found to have been used for captive generation of electricity and the issue was treated as covered by prior Tribunal authority holding that oil used as fuel for generating electricity does not qualify as an eligible input under Rule 57A of the Central Excise Rules, 1944. The factual distinction relied upon by the assessee was held to be inapplicable.

Conclusion: Modvat credit was not admissible on light diesel oil used for generation of electricity, and the issue was decided in favour of the Revenue.

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