2012 (5) TMI 550 - AT - Central Excise

Rectification of Mistake - Admissibility of Cenvat credit - Cenvat credit on welding electrodes used in repair and maintenance of machinery - Held that - In the matter of admissibility of Cenvat credit there cannot be any difference between Welding Electrodes and Acetylene Gas and Oxygen Gas because the first item is used in electrical welding and the other two items are used in gas welding. The nature of welding cannot make a difference to admissibility of Cenvat credit. So we modify the order to allow Cenvat credit on Acetylene Gas and Oxygen Gas also - words captive mines used in the said decisions have to be understood to mean assessee s own mines rather than mine around one factory of the assessee. The mines by its very nature cannot be inside the factory. So credit cannot be denied for the reason that mines were situated 3 to 4 Kms away from the factory - So we hold that Cenvat credit on explosives used in mines is to be allowed in this case - Decided in favour of assessee.

Issues:
1. Rectification of Mistake in Final Order Nos. 991 & 992/2011-EX.
2. Admissibility of Cenvat credit on welding electrodes, Acetylene Gas, Oxygen Gas, and explosives used in mines.

Analysis:
1. The case involved Applications for Rectification of Mistake in Final Order Nos. 991 & 992/2011-EX. The appeals were filed by the applicant, Maihar Cement Ltd., and the Revenue. In the absence of representation from the Revenue, the case was reviewed with the assistance of the Counsel for the assessee-applicant.

2. The issues in Appeal No. 2236 were related to Cenvat credit on welding electrodes, while Appeal No. 3816 involved the admissibility of Cenvat credit on welding electrodes, Acetylene Gas, Oxygen Gas, and explosives used in mines. The original order only addressed welding electrodes, prompting the applicant to argue for credit on Acetylene Gas and Oxygen Gas as well.

3. The applicant contended that Acetylene Gas and Oxygen Gas should be treated similarly to welding electrodes for Cenvat credit purposes. Regarding explosives used in mines, reliance was placed on a Supreme Court decision allowing Cenvat credit for materials used in captive mines, despite the mines being located away from the factory.

4. The Revenue argued that Cenvat credit is limited to inputs used within the factory premises, citing differences between the Central Excise Rules and the Cenvat Credit Rules. They disputed the applicability of the Supreme Court decision in the context of the Cenvat Credit Rules, emphasizing the distance between the mines and the factory.

5. After considering both arguments, the Tribunal held that there should be no distinction in granting Cenvat credit between welding electrodes and Acetylene Gas/Oxygen Gas. They modified the order to allow credit for the latter as well. Additionally, based on a Supreme Court ruling, they clarified that mines being a few kilometers away from the factory did not disqualify them as captive mines, thus allowing Cenvat credit on explosives used in mines.

6. The Tribunal emphasized that the term "captive mines" should refer to the assessee's own mines, rather than mines in close proximity to one factory. They rejected the Revenue's argument that supplying ore to multiple factories affected the captive mine status. Consequently, they modified the Final Order to permit Cenvat credit on explosives used in mines.

7. Ultimately, the Applications for Rectification filed by both the assessee and the Revenue were disposed of, with the Tribunal's modifications to the Final Order being pronounced in court.

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