2000 (9) TMI 391 - AT - Central Excise

Summary

Issues:
1. Availability of Modvat credit on explosives used in mining of lime-stone.
2. Admissibility of Modvat credit on furnace oil supplied by a depot/installation of M/s. Indian Oil.

Analysis:

Issue 1: Availability of Modvat credit on explosives used in mining of lime-stone
The Tribunal had previously held that Modvat credit was available on explosives based on earlier decisions. However, a larger Bench of the Tribunal held that Modvat credit shall not be admissible for explosives not used inside the factory for the production of the finished product. The appellant argued that explosives are used away in the mining area, and Rule 57A of the Central Excise Rules specifies that Modvat credit is for goods used in the manufacture of the final product in the factory. The Tribunal noted that the factory has a specific meaning under the Excise law and explosives are not typically used in the manufacture of lime-stone in the factory. Therefore, a point of law was identified, and it was decided to refer the matter to the Hon'ble Madhya Pradesh High Court at Jabalpur for clarification.

Issue 2: Admissibility of Modvat credit on furnace oil supplied by a depot/installation of M/s. Indian Oil
Regarding furnace oil, the Tribunal considered the case where the oil was supplied by the Indian Oil Corporation outlet at Satna. It was noted that the outlet was preparing documents in compliance with Rule 57GG, which required registration with the Excise authorities. The Tribunal found that the registration of the outlet with the Excise authorities was a statutory requirement. However, in the previous case under consideration, this aspect was not addressed. Recognizing the significance of this issue, the Tribunal decided that a point of law arose for reference to the Hon'ble Madhya Pradesh High Court.

In conclusion, the reference application was allowed by the Tribunal based on the findings related to the availability of Modvat credit on explosives used in mining of lime-stone and the admissibility of Modvat credit on furnace oil supplied by a depot/installation of M/s. Indian Oil. The decision to refer these points of law to the Hon'ble Madhya Pradesh High Court was made to seek clarification on these matters.