2005 (3) TMI 372 - AT - Central Excise

Summary

Issues:
1. Availability of Modvat credit on machinery, equipments, and parts used in limestone mines under Rule 57A of Central Excise Rules, 1944.

Analysis:
In the appeals filed by M/s. Madras Cements Limited, the primary issue revolves around whether Modvat credit of duty paid on machinery, equipments, and parts used in limestone mines is eligible under Rule 57A of the Central Excise Rules, 1944. The appellant contended that the limestone mining process is intimately connected with cement manufacturing, making these goods essential inputs. They relied on precedents like Andhra Pradesh Paper Mills Ltd. and Tata Engineering & Locomotive Co. Ltd. to support their claim that goods used in processes related to manufacturing are eligible inputs. However, the respondent argued that machinery and equipment are excluded from the definition of "inputs" under Rule 57A, as per the Explanation provided. The Tribunal emphasized that for Modvat credit eligibility, goods must not only be used in or in relation to manufacturing but must also qualify as "inputs" as per Rule 57A. Since machinery and equipment are explicitly excluded, the appellant's claim for Modvat credit on these goods was rejected.

Regarding the denial of Modvat credit beyond six months from the date of issue of the duty paying document as per Rule 57G(2), the Tribunal deemed this issue unnecessary as Modvat credit was found ineligible for the impugned goods. The appellant's argument that the reasoning in the show cause notice was vague was dismissed, as the notice clearly stated that the goods were not within the definition of "inputs" in Rule 57A. Consequently, both appeals were rejected, affirming the disallowance of Modvat credit on machinery, equipments, and parts used in limestone mines. The Tribunal also highlighted that even if the impugned goods were used in or in relation to manufacturing, they did not meet the criteria of being excluded machinery and equipment under Rule 57A, rendering them ineligible for Modvat credit. The judgment reinforced the importance of goods meeting the specific definition of "inputs" to qualify for Modvat credit under the Central Excise Rules, 1944.

Lastly, the Tribunal clarified that even if the impugned goods were used in the manufacturing process, they did not fall under the category of "inputs" as per the Explanation to Rule 57A, which excludes machinery, equipment, and parts. This exclusion led to the rejection of the appellant's claim for Modvat credit on these goods, regardless of their usage in or in relation to the manufacture of final products. The judgment underscored the significance of goods meeting the criteria outlined in the Central Excise Rules to be considered eligible for Modvat credit, thereby upholding the disallowance of credit on machinery, equipments, and parts used in limestone mines.