2002 (8) TMI 162 - AT - Central Excise

Summary

Issues:
Appeal by Revenue against Commissioner (Appeals) orders allowing Cenvat credit on Explosives and Lubricants & greases used at off-factory sites.

Analysis:
The primary issue in this case was whether Explosives and Lubricants used at off-factory sites were eligible for Cenvat credit. The original authority followed a Tribunal decision and denied credit, while the lower appellate authority relied on a Supreme Court decision to grant credit. The Revenue contended that for Cenvat credit, inputs should be used in the factory of production of final products. The definition of "input" under Rule 57AA was crucial in determining eligibility for credit.

The arguments presented by both sides focused on the interpretation of the definition of "input" under Rule 57AA. The Revenue argued that Lubricants used outside the factory were not eligible inputs, while the respondents' counsel contended that the machinery lubricated by the Lubricants was used for manufacturing final products, making them eligible for credit. The Tribunal examined the usage of Explosives and Lubricants outside the Cement Factory and the definition of "input" under Rule 57AA.

The Tribunal found that while Explosives used for mining limestone were eligible for credit based on previous decisions, Lubricants used for machinery away from the factory required further examination. It was determined that Lubricants could be considered for credit only if the machinery they were used on was involved in the manufacturing process. The absence of the adverbial "within the factory of production" in the definition of "input" pertaining to Lubricants was a crucial factor in this analysis.

In the interest of justice, the Tribunal set aside the lower authorities' decisions regarding Lubricants and remanded the case for further adjudication. The respondents were given an opportunity to prove that the Lubricants were used on machinery involved in the manufacturing of final products, and credit had been duly taken. The appeal related to Explosives was rejected, while the appeal concerning Lubricants was allowed for remand based on the above terms.