2015 (11) TMI 670 - AT - Central Excise

Denial of MODVAT Credit - Capital goods used in the captive mines and outside the factory - Held that - As regard capital goods used in the mines as per the submission of the appellant and ground plan submitted by them it is clear that it is captive mines which is used exclusively for the appellant factory. Hon ble Supreme Case in the case of Vikram Cement (2006 (2) TMI 1 - Supreme court) held that capital goods used in the captive mines, Cenvat Credit is admissible. Following the ratio of the Apex court and being facts identical in the present case, in my considered view, the appellant is entitled for Cenvat Credit in respect of goods used in the captive mines of the appellant. - As regard the claim of Cenvat credit on Tyre Protection Chain, the credit on same item has been allowed in the case of A.C.C. Ltd.(2000 (3) TMI 88 - CEGAT, NEW DELHI) which was passed by the Coordinate Bench of this Tribunal and upheld by the Hon ble Panjab and Haryana High Court. Following the ratio of the said judgment, I allow the Cenvat Credit to the appellant in respect of tyre protection chain. Once the material is used in the immovable goods, as held by the Larger Bench in the case of Vandana Global(2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)) the material used in the manufacture of such immovable goods shall not be eligible for Cenvat Credit. In the judgment of Rajasthan Spinning & Weaving Mills Ltd(2010 (7) TMI 12 - SUPREME COURT OF INDIA) of the Hon ble Apex Court and other judgment cited by the Counsel, the capital goods wherein material was used, the test of immovability was not dealt with. Since admittedly CTD bar and other steel items used for construction of Silo which is immovable goods, the same will not qualified as capital goods. In view of this position, I am of the considered view that appellant is not entitled for Cenvat Credit in respect of material i.e. CTD Bars, Angles, Channels, etc. used for construction of silo. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Disallowance of Cenvat Credit on capital goods used in the factory premises and mines.
2. Disallowance of Cenvat Credit on Diesel Locomotive.
3. Disallowance of Cenvat Credit on Tyre Protection Chain.
4. Disallowance of Cenvat Credit on CTD Bars, Angles, Channels, etc. used for construction.

Analysis:

1. Disallowance of Cenvat Credit on capital goods used in the factory premises and mines:
The appellant contended that the capital goods used in the captive mines were also used within the factory premises, making them eligible for credit. Citing relevant case laws, the appellant argued for the admissibility of credit. The Tribunal, following the Supreme Court's decision in Vikram Cement case, allowed the Cenvat Credit for goods used in the captive mines, as the facts were similar to the precedent.

2. Disallowance of Cenvat Credit on Diesel Locomotive:
The appellant justified the credit on the Diesel Locomotive by asserting its role in material movement within the plant for manufacturing final products. Referring to various case laws and the judgment in M/s Jayaswal Neco Ltd., the Tribunal agreed that the Diesel Locomotive's use was integral to the manufacturing process, similar to the allowance of credit on railway tracks. Therefore, the Tribunal allowed the Cenvat Credit for the Diesel Locomotive.

3. Disallowance of Cenvat Credit on Tyre Protection Chain:
The appellant argued for the admissibility of credit on Tyre Protection Chain, emphasizing its usage in protecting tires for smooth operations. Referring to a previous Tribunal decision upheld by the High Court, the Tribunal allowed the Cenvat Credit on Tyre Protection Chain, aligning with the precedent.

4. Disallowance of Cenvat Credit on CTD Bars, Angles, Channels, etc. used for construction:
Regarding the CTD Bars and related items used in constructing the silo, the appellant contended that since the silo was an immovable good, the materials used should qualify for Cenvat Credit. However, the Tribunal held that as per the Larger Bench decision and relevant judgments, materials used in immovable goods construction were not eligible for credit. Therefore, the Tribunal disallowed the Cenvat Credit on CTD Bars, Angles, Channels, etc., used for construction.

In conclusion, the Tribunal partially allowed the appeal, permitting Cenvat Credit on capital goods used in captive mines, Diesel Locomotive, and Tyre Protection Chain while disallowing credit on CTD Bars, Angles, Channels, etc., used for construction. The decision was based on a thorough analysis of the arguments presented, relevant case laws, and the specific usage of the items in question.