1999 (8) TMI 327 - AT - Central Excise

Summary

Issues:
1. Entitlement to Modvat credit on inputs used in the manufacture of Cement and Clinker.
2. Definition of "Mine" and "Factory" under the Central Excise Act.
3. Commencement of the manufacturing process of Cement from the stage of excavation of limestone in the mine.

Analysis:
The judgment by the Appellate Tribunal CEGAT, Chennai revolves around the entitlement to Modvat credit on inputs used in the manufacture of Cement and Clinker. The respondents, who are manufacturers of Cement and Clinker, quarry limestone from their own mines for the production of Cement. They sought Modvat benefit by declaring the duty paid on the inputs under relevant rules and notifications. Initially, their claim for Modvat credit was rejected by the lower authority but later allowed by the first appellate authority, leading to the Revenue's appeal challenging this decision. The Larger Bench of the Tribunal ultimately ruled in favor of the Revenue, denying the assessees the Modvat credit for the named inputs.

Regarding the specific questions raised by the respondents for reference to the High Court, the first question pertains to whether the "Mine" used for limestone excavation qualifies as a "Factory" under the Central Excise Act for claiming Modvat credit. The second question questions whether the Cement manufacturing process commences from the stage of limestone excavation in the mine. The respondents' advocate highlighted similar issues in another batch of appeals related to the denial of Modvat credit for equipment used in mines, which were also dismissed. Consequently, they sought a reference to the High Court, drawing parallels with a previous case.

The Tribunal, after considering the submissions, noted that the High Court of Andhra Pradesh had directed a reference of similar questions in a related matter. Since the Tribunal had rejected the Modvat credit for inputs like explosives used in mines in the present case, it was deemed appropriate to refer the matter to the High Court. The Tribunal allowed the reference application, directing the Registry to refer the case to the High Court of Andhra Pradesh for further consideration. This decision underscores the significance of the interpretation of the Central Excise Act's definitions and the eligibility criteria for Modvat credit in the context of mining operations and Cement manufacturing.