2002 (8) TMI 375 - AT - Central Excise

Summary

Issues:
- Grant of CENVAT credit on explosives used for mining limestone away from the cement factory
- Grant of CENVAT credit on lubricating oils and greases used in limestone mines

Explosives for Mining Limestone:
The Revenue challenged the grant of CENVAT credit under Rule 57AB to the respondents for using explosives in mining limestone away from the cement factory. The Revenue contended that the explosives were not used within the factory of cement production, thus not qualifying as inputs for CENVAT credit. The Revenue argued that the Commissioner (Appeals) erred in relying on a Supreme Court decision, asserting that the explosives were not eligible for credit. On the other hand, the respondents' counsel argued that the definition of 'input' under Rule 57AA was akin to the previous rule, and the Supreme Court's ruling on explosives used for a similar purpose applied. The Tribunal referred to a previous decision and held that explosives used for mining limestone were eligible for CENVAT credit as they were used in or in relation to the manufacture of final products.

Lubricating Oils and Greases:
Regarding lubricating oils and greases used in the limestone mines, the Revenue contended that these items were not used within the production factory and thus did not qualify as inputs for CENVAT credit. The Tribunal noted that the lubricants were used for machinery outside the cement factory, primarily for crushing limestone. The Tribunal emphasized that for lubricants to be considered as used in or in relation to the manufacture of final products, the machinery itself must be used for manufacturing. As the machinery was not proven to be used for manufacturing cement, the lubricants were not deemed to be used in or in relation to the final product's manufacture. The Tribunal set aside the lower authorities' decision on lubricants and directed a reevaluation based on whether the machinery was used for cement production and if capital goods credit was claimed on it, to determine the eligibility of lubricants and greases for CENVAT credit.

In conclusion, the Tribunal upheld the CENVAT credit on explosives used for mining limestone away from the cement factory but remanded the decision on lubricating oils and greases used in the limestone mines for further evaluation based on the machinery's use in cement production and capital goods credit claims.