1997 (5) TMI 219 - AT - Central Excise

Summary

Issues:
- Admissibility of Modvat credit on grinding media and explosives for a cement manufacturer.
- Interpretation of Central Excise law regarding Modvat credit eligibility.
- Application of Tribunal decisions in similar cases on Modvat credit.

Analysis:
The judgment revolves around the admissibility of Modvat credit on grinding media and explosives for a cement manufacturer. The Collector (Appeals) had initially allowed the Modvat credit for the assessee, but the Commissioner, Central Excise, filed an appeal against this decision. The key contention was whether grinding media balls and explosives could be considered eligible for Modvat credit. The Asstt. Collector had initially denied the credit, stating that grinding media balls were akin to appliance equipment and tools, and explosives were not used on the licensed premises of the factory under Central Excise law.

The appellant Commissioner argued that the Tribunal's decision in a previous case was not accepted by the Department, and a Circular by the Central Board of Excise and Customs clarified that Modvat credit on grinding media balls was inadmissible. Similarly, the admissibility of Modvat credit on explosives was also challenged by the Department. The Department sought to set aside the decision of the ld. Collector (Appeals) and allow the appeal based on these arguments.

On the other hand, the respondents, represented by Shri P.N. Kaul, relied on Tribunal decisions in similar cases to support their claim for Modvat credit on grinding media and explosives. They cited precedents such as the case of Indian Rayon & Industries Limited and Collector, Central Excise v. Durgapur Cement to argue in favor of the admissibility of Modvat credit. The respondents contended that the issues raised in the appeals were fully covered by Tribunal decisions and requested the appeals to be rejected.

After considering the submissions from both sides, the Tribunal examined the legal aspects and previous judgments. Regarding grinding media balls, the Tribunal found that Modvat credit should be allowed as these balls were used for grinding materials in a cement factory and were not considered apparatus, appliances, or parts of machines. The Tribunal also noted that even if treated as parts of a machine, the exclusion clause under Rule 57A of the Central Excise Rules did not apply to parts of machines. Therefore, the Tribunal agreed with the decision that grinding media balls were eligible for Modvat credit.

Concerning explosives, the Tribunal found that previous decisions, including the case of M/s. Associated Cement Companies Limited and M/s. Indian Rayon & Industries Limited, supported the admissibility of Modvat credit on explosives as inputs. The Tribunal upheld the impugned order, rejected the appeal, and disposed of the cross-objections accordingly based on these findings.