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1997 (12) TMI 442 - AT - Central Excise
Issues:
- Benefit of Modvat credit in respect of Hydraulic excavator used in the mine. Analysis: The appeal before the Appellate Tribunal CEGAT, Madras centered around the issue of whether the appellant was entitled to the benefit of Modvat credit for a Hydraulic excavator used in the mines adjacent to the factory for mining limestones. The appellant's counsel argued that the entire process, from mining the limestones to crushing them and using the resulting material in the manufacture of cement, was integrally connected with the production of cement. Reference was made to a previous decision where a similar benefit was granted. However, it was noted that in that case, it was unclear whether the crushing took place within the mine premises. The Tribunal considered the submissions from both sides, including the arguments put forth by the appellant's counsel and the decision of the Hon'ble Supreme Court cited. It was emphasized that the Supreme Court decision was related to sales tax provisions and not Modvat credit. The Tribunal referred to Rule 57Q and a previous decision dated 11-7-1997, where it was observed that mining activity and cement factory operations are distinct under different Acts. The Tribunal highlighted the definition of a factory as a place where manufacturing activity occurs, and concluded that the mining process could not be considered part of the cement manufacturing process. Therefore, the benefit of Modvat credit was denied based on the lack of integral connection between mining and cement production. In light of the previous decision and the analysis of the operations involved, the Tribunal dismissed the appeal filed by the appellants. The Tribunal reiterated that the process did not fall within the scope of Rule 57Q, as it was not integral to the manufacture of the notified finished product, cement. The decision was based on the understanding that activities generating raw materials must be directly connected to the manufacturing process to qualify for Modvat credit.
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