2016 (11) TMI 103 - AT - Central Excise

MODVAT/CENVAT credit - Rule 57Q of Central Excise Rules, 1944 - manufacturers of cement and clinker - use of subject items in the factory except in case of hydraulic excavator, which was used by the appellant in their mines - Held that - the matter is squarely covered by the Hon ble Supreme Court s decision in case of Madras Cement Ltd. vs. CCE, Chennai 2010 (7) TMI 179 - SUPREME COURT where it was held that 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 - credit availabe - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Disallowance of modvat credit under Rule 57Q of Central Excise Rules, 1944.
- Interpretation of whether the capital goods used in mines are eligible for modvat credit.
- Applicability of relevant case laws in determining the eligibility of modvat credit.

Analysis:
The case involved an appeal by M/s. Rajashreee Cements against the disallowance of modvat credit amounting to ?14,99,586 under Rule 57Q of Central Excise Rules, 1944. The dispute centered around the disallowance of credit on various goods used by the appellants in their manufacturing process. The appellant argued that the goods, except for the Hydraulic Excavator used in their mines, were utilized in their factory, making them eligible for modvat credit. They contended that as per Section 57Q, modvat credit on capital goods used in the factory is permissible. The appellant further relied on legal precedents to support their claim, emphasizing that mines of cement manufacturers are considered part of the factory for the purpose of claiming excise duty credit on capital goods.

The Tribunal carefully examined the submissions, facts, and case laws cited by both parties. It noted that the issue at hand was akin to previous judgments by the Hon’ble Supreme Court and CESTAT Kolkata, particularly referencing the decision in the case of Madras Cement Ltd. vs. CCE, Chennai, and Vikram Cement vs. CCE, Indore. The Tribunal highlighted the Supreme Court's stance that if mines are captive and form an integrated unit with the cement factory, modvat credit on capital goods should be available to the assessee. Citing these authoritative decisions, the Tribunal allowed the appeal, granting consequential relief to the appellant. The judgment was pronounced in open court on 04/10/2016.