Per Jyoti Balasundaram :

The issue before this Bench relates to admissibility of modvat credit under Rule 57A of the Central Excise Rules on fuel oils such as Low Sulphur Heavy Stock (LSHS) and furnace oil for captive generation of electricity which in turn is used for manufacture of final product of the assesees. In the case of Ballarpur Industries Ltd., LSHS and furnace oil are used in Diesel Generation Sets for generation of electricity used for electrolysis in their Caustic Soda Plant. In the case of Modi Cements Ltd., furnace oil and light diesel oil are used in Diesel Generating Sets for generating electricity used for firing kilns for manufacture of cement and clinker and for maintaining constant supply of electricity in the plant. In the case of Jaypee Rewa Cement, furnace oil is used in Diesel Generating Sets for generation of electricity for manufacture of cement. In the case of Modipon Ltd., Residual Fuel Oil (RFO) is used for generation of electricity used as fuel for manufacture of synthetic filament yarn. In the case of India Glycols Ltd. Residual Fuel Oil (RFO) is used in the Diesel Generating Sets for generation of electricity for the manufacture of chemicals such as mono-ethylene glycol, Di-ethylene Glycol, Tri-ethylene Glycol, etc. In the case of Risshabh Steel Ltd., light diesel oil, furnance oil and mobile oil in the Diesel Generating Sets for generating of electricity to run the furnace in which iron and steel products such as MS ingots, etc., are produced.

2. At the outset, the objection to jurisdiction of this Bench to hear the matter has been raised by Shri A.K. Jain, Learned Advocate on the following grounds:

1. That the matter has been referred to a Larger Bench vide Order dated 9.12.97 without the referring Bench expressing its opinion with regard to the correctness of any of the conflicting judgments on the issue which is not permissible, in the light of the decision of the Hon'ble Supreme Court in case of Union of India vs. Paras Laminates P. Ltd. reported in 1990 (49) ELT 322 SC and in the case of Brite Automotives and Plastics Ltd. vs. Collector of Central Excise, Indore reported in 1995 (6) RLT 565 = 1995 (75) ELT 793.

2. On 13.5.99, when the President of the Tribunal took the decision to constitute the Larger Bench, there were no conflicting judgments, since the Southern Zonal Bench had already recalled its order in the case of Ferro Alloys Corporation reported in 1997 (20) RLT 778, vide Final Order No. - dated 9.3.99, and allowed the appeal of the assessees following the decision of the Northern Regional Bench in the case of Rathi Alloys reported in 1997 (19) RLT 316 (T) = 1997 (93) ELT 594 (T).

3. There is no provision in the Central Excises Act and the CEGAT (Procedure) Rules, 1982 empowering the President of the Tribunal to constitute a Larger Bench in the event of conflict of judgment and that the Tribunal being a creation of Statute, it is bound by its rules and procedures. In this connection, he cites the Supreme Court judgment in the case of Gurucharan Dass Chaddha Vs. State of Rajasthan reported in AIR 1966 SC 418 and the judgment in the case of Income Tax Appellate Tribunal vs. Dy CIT (Asst.) III, Hyderabad reported in 1996 (82) ELT 4 (SC). Learned Counsel, therefore, submits that in these circumstances, the only course open to the Bench which heard this case was to decide appeals on the basis of Rathi Alloys decision, holding that the later judgment in the case of Ferro Alloys Corporation cited supra was per incuriam.

3. The above objections are not tenable. One of the objects of constituting Larger Bench is conflict resolution. The existence of conflict of decisions has been held to be a rational and valid ground for the President of the Income Tax Appellate Tribunal to act in exercise of his administrative powers to constitute a Special Bench if he thought it. fit to do so, by the Hon'ble Supreme Court in the case of ITAT vs. Dy. CIT (Asst.) III Hyderabad reported in 1996 (82) EL