1999 (9) TMI 157 - AT - Central Excise

Appellate Tribunal allows modvat credit on HSD Oil; Notification applies prospectively

The Appellate Tribunal CEGAT, CALCUTTA ruled in favor of the respondents, allowing them to claim modvat credit on HSD Oil between 8-6-1997 to 19-2-1998 ... Modvat rules - Amendment of Issues involved: Interpretation of Rule 57B of the C. Ex. Rules, 1944 regarding availing modvat credit on HSD Oil prior to the introduction of an Explanation via Notification No. 5/98.Summary:The appeal before the Appellate Tribunal CEGAT, CALCUTTA centered around whether the respondents were eligible to claim modvat credit on HSD Oil between 8-6-1997 to 19-2-1998 under Rule 57B of the C. Ex. Rules, 1944, considering the introduction of an Explanation through Notification No. 5/98 on 2-3-1998. The Explanation clarified that the term 'input' in Rule 57B referred only to inputs specified in a Notification under Rule 57A. The Department contended that this Explanation applied retrospectively, leading to the denial of modvat credit for HSD Oil by the adjudicating authority.Upon appeal, the Commissioner (Appeals) ruled that the Explanation would be effective only from its issuance date, overturning the earlier decision and allowing the appeal. The Tribunal Member, Smt. Archana Wadhwa, heard arguments from both parties and noted that a similar issue had been addressed in the case of Ester Industries v. C.C.E., Meerut. In that case, it was held that the Explanation was prospective as per the Notification's publication date, rejecting the Revenue's argument for retrospective application. Citing precedent and the Tribunal's decision, the appeal by the Revenue was dismissed, affirming the respondents' entitlement to the modvat credit on HSD Oil for the period in question.