2018 (5) TMI 1293 - AT - Central Excise

CENVAT credit - whether the credit availed on inputs viz., lubricants and explosives and capital goods/spares used in the mines can be allowed or not? - Held that - the Hon ble Supreme Court in the case of Vikram Cement vs. CCE, Indore 2006 (2) TMI 1 - SUPREME COURT has held that 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 - In the present case, it is not in dispute that the mines are captive mines - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against rejection of CENVAT credit on inputs and capital goods used in mines.

Analysis:

Issue 1: CENVAT credit on inputs (lubricants and explosives)
The appellant availed credit on inputs and capital goods used in manufacturing clinker and cement. The Order-in-Original disallowed a portion of the credit, leading to the appeal. The counsel argued that the issue of allowing credit on such inputs has been settled by various decisions of the Tribunal, High Court, and Supreme Court, citing cases like Japee Rewa Cement vs. CCE, MP and Madras Cements Ltd. vs. CCE, Chennai. The Tribunal referred to the decision in Vikram Cement vs. CCE, Indore, where the Supreme Court allowed credit on inputs like explosives and lubricating oils. The Tribunal, considering the submissions and precedents, allowed the appeal in favor of the appellant, setting aside the impugned order.

Issue 2: CENVAT credit on capital goods used in mines
Regarding the CENVAT credit on capital goods used in mines, the Tribunal referred to the case of Vikram Cement vs. CCE, Indore, where the Supreme Court differentiated between captive mines and non-captive mines. If the mines are captive, forming an integrated unit with the cement factory, the credit on capital goods is available. In the present case, it was established that the mines were captive. Relying on the precedents and the specific ruling, the Tribunal concluded that the appellant was entitled to the CENVAT credit on capital goods used in the captive mines. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.

In conclusion, the Tribunal allowed the appeal in favor of the appellant, granting CENVAT credit on both inputs and capital goods used in the manufacturing process, based on established legal precedents and specific rulings cited during the proceedings.