2004 (2) TMI 252 - AT - Central Excise

Summary

Issues:
1. Availability of MODVAT Credit for duty paid on capital goods used in mines.

Analysis:
The appeal questioned whether MODVAT Credit for duty paid on capital goods used in mines is available to M/s. Hindustan Zinc Ltd. The appellant argued that the mining activities were integral to the manufacturing process of final products, citing previous tribunal and court decisions supporting their claim. They contended that the mines were part of the factory premises as they were underneath the concentration plant. However, the Revenue argued that Rule 57Q required capital goods to be used in the factory of the manufacturer of final products to avail MODVAT Credit. They emphasized that the mines were not part of the factory as per the Factory's Act definition and previous judicial decisions. The appellant countered by asserting that the mines were covered under the factory definition in the Central Excise Act.

The Tribunal deliberated on the submissions. It clarified that MODVAT Credit is only available if capital goods are used in the factory of the manufacturer of final products. In this case, the capital goods were used in the mines, not in the factory. The contention that mines were part of the factory premises due to their proximity was dismissed, as the mines being underground did not qualify as part of the factory. The Tribunal referenced the Supreme Court judgment in Jaypee Rewa Cement case, which disallowed MODVAT Credit for capital goods not used within the factory premises. Previous decisions cited by the appellant were deemed irrelevant, as they did not align with the specific provision of Rule 57Q requiring capital goods to be used in the factory for final product manufacturing. The appeal was consequently rejected, upholding the decision that capital goods used in mines below the factory premises were not eligible for MODVAT Credit.