Retrospective effect of Rule 57B Explanation on captive power Modvat credit left for larger Bench, with interim stay granted.

The retrospective effect of the Explanation added to Rule 57B, excluding inputs used for captive generation of electricity from Modvat credit, remained unresolved because competing Tribunal views existed and the issue required consideration by a larger Bench. Interim protection was therefore granted: the assessees obtained unconditional stay and waiver of the confirmed duty pending final adjudication. The main appeals were directed to be placed before an appropriate Bench for final hearing on the disputed Modvat question.

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Issues: Whether the Explanation added to Rule 57B excluding inputs used for captive generation of electricity warranted immediate denial of Modvat credit and whether unconditional stay of the duty demand should be granted pending final adjudication.

Analysis: The competing Tribunal views on Modvat credit for HSD oil used in captive generation of electricity showed that the controversy on eligibility was not settled by the earlier authorities. The Explanation inserted into Rule 57B was subsequent to the availment of credit, and its retrospective effect could not be assumed as a matter finally resolved in this order. As the effect of the Explanation required consideration by a larger Bench, the matter was not fit for final disposal at the stage of a single Member. Pending such final hearing, interim protection was considered appropriate.

Conclusion: The substantive question on the retrospective effect of the Explanation was left for determination by an appropriate Bench, and unconditional stay together with waiver of the confirmed duty was granted in favour of the assessees.

Final Conclusion: The stay applications were allowed, while the main appeals were directed to be placed before an appropriate Bench for final hearing on the disputed Modvat issue.

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