2012 (2) TMI 416 - AT - Central Excise

Whether Drills and Bits used in the instant case are eligible for Cenvat credit - Held that - The Lower Adjudicating Authority in his finding at page Three has admitted that the said goods were used in the Captive Mines of the assessee - As regards the Modvat/Cenvat credit on capital goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods will be available to the assessee. On the other hand, if the mines are not captive mines but they supply to various other cement companies of different assessees, Modvat/Cenvat credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate Modvat/Cenvat Rules. The matters are remanded to the respective original authorities for decision only on the above issue - Following decision of GAJAMBUJA CEMENT Versus COMMISSIONER OF C. EX., BHAVNAGAR 2007 (11) TMI 139 - CESTAT AHMEDABAD - Decided in favour of assessee.

Summary

Issues: Appeal against disallowance of Modvat credit on Drills and Bits used in mining area.

Analysis:
1. Issue of Disallowance of Modvat Credit: The appellant appealed against the disallowance of Modvat credit amounting to Rs. 99,960 on the grounds that the Drills and Bits were used in their captive mines, which are registered with the Central Excise Authorities. The appellant contended that as per the decision of the Hon'ble Supreme Court in the case of Vikram Cement, Modvat credit on capital goods used in captive mines is allowable. The lower authorities confirmed the disallowance, but the penalty was dropped by the ld. Commissioner (Appeals), which was not challenged. The appellant argued that since their factory is a captive mine, the Modvat credit should be allowed.

2. Contention of the Department: The Department, represented by the A.R., argued that the appellant failed to produce documentary evidence to support their claim. The A.R. reiterated the findings of the lower authorities, maintaining that the Modvat credit on Drills and Bits used by the appellant was not eligible.

3. Judgment and Analysis: The Tribunal considered the submissions and records, noting that the availability of Cenvat credit on Drills and Bits was not disputed. The main issue was whether these items were eligible for Modvat credit. The Lower Adjudicating Authority and the ld. Commissioner (Appeals) both acknowledged that the goods were used in the captive mines of the appellant. Citing the decision of the Hon'ble Supreme Court in the case of Vikram Cement, the Tribunal held that if the mines are captive and form an integrated unit with the concerned factory, Modvat credit on capital goods will be available. Since the Department did not challenge the findings that the factory was a captive mine, the Tribunal found the appellant's claim valid. Therefore, the order of the ld. Commissioner (Appeals) was set aside, and the appeal was allowed with consequential relief as per law.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the legal reasoning behind the Tribunal's decision to allow the Modvat credit on Drills and Bits used in the appellant's captive mines.