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Issues: Whether Modvat credit on HSD oil used as an input for generation of electricity within the factory of production was admissible under the Central Excise Rules despite exclusion in Notification No. 8/95, and whether the Revenue's reference application raised a referable question of law.
Analysis: The second proviso to Rule 57D of the Central Excise Rules, 1944 was treated as a specific provision intended to bring within the Modvat scheme inputs used for generation of electricity consumed within the factory for manufacture of the final product. Notification No. 8/95 excluded HSD oil as an input under Rule 57A, but Notification No. 11/95, issued on the same day, granted benefit to inputs used for generation of electricity within the factory. A harmonious reading of the notifications was adopted, and the exclusion in Notification No. 8/95 was held not to override the proviso to Rule 57D where the conditions of that proviso were satisfied.
Conclusion: HSD oil was eligible for Modvat credit if the conditions of the second proviso to Rule 57D were fulfilled, and the Revenue's proposed reference did not disclose a referable question of law.
Final Conclusion: The ruling in favour of Modvat eligibility was left undisturbed and the request to refer the matter to the High Court failed.
Ratio Decidendi: A specific proviso allowing credit for inputs used to generate electricity within the factory prevails, on harmonious construction, over a general exclusion of the input in an exemption or input notification, where both are capable of being read together.
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