2016 (8) TMI 619 - AT - Central Excise

Cenvat credit - rock bolt used as support for the mining walls - appellants are engaged in the manufacture and clearance of dutiable zinc/lead ore concentrates - cleared to their own smelters for further manufacture of metals - Held that - considering the admitted fact that rock bolts are used as fixtures in the process of mining of ores the denial of credit on such rock bolts is legally not sustainable. The Original Authorities finding that rock bolts are not used in the manufacture of zinc is completely out of context and has no relevance to find their eligibility for credit. The rock bolts being used as fixtures in mining process are entitled for credit as they are covered by specific description of fixtures under Rule 2(a)(A)(iv) of Cenvat Credit Rules, 2004. - Decided in favour of assessee

Summary

Issues: Availability of Cenvat credit on rock bolts used in mining for the manufacture of zinc and lead concentrates.

Analysis:
1. Issue of Cenvat Credit Eligibility: The appellants, engaged in manufacturing lead and zinc concentrate, sought Cenvat credit on rock bolts used in mining at their Sindesar Khurd Mines. The Department denied the credit, asserting no connection between the rock bolts and the manufacture of zinc. The appellant argued that the rock bolts were essential for unhindered mining operations, as explained in the original order. The lower Authorities acknowledged the usage of rock bolts in mining but denied credit, claiming they were not directly related to zinc manufacturing. However, the appellant contended that since they were engaged in manufacturing zinc/lead ore concentrates and the rock bolts were used as fixtures in the mining process, credit should not be denied based on the nexus between rock bolts and zinc production.

2. Contention of the Authorities: The Authorized Representative supported the lower Authority's decision, stating that rock bolts became part of the civil structure and were ineligible for credit. However, the appellant argued that the denial of credit based on the rock bolts becoming part of the civil structure was not justified, as the rock bolts were integral fixtures in the mining process and were covered under the specific description of "fixtures" under the Cenvat Credit Rules, 2004.

3. Decision and Analysis: After hearing both sides and examining the appeal records, the Tribunal focused on the eligibility of rock bolts for Cenvat credit. The Original Authority's conclusion that rock bolts were not used in the manufacture of zinc was deemed irrelevant, as the rock bolts were crucial fixtures in the mining process. The Tribunal found that the denial of credit on rock bolts used in mining was legally unsustainable. By considering the admitted fact that rock bolts were essential fixtures in the mining of ores, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. The judgment emphasized that the rock bolts, being used as fixtures in the mining process, were entitled to credit under the Cenvat Credit Rules, 2004.