2001 (7) TMI 535 - AT - Central Excise

Summary

Issues:
- Availability of Modvat credit on blow bar and breaker bar used in mining area.
- Interpretation of the definition of factory under Section 2(e) for Central Excise purposes.

Analysis:
1. Modvat Credit Eligibility: The appellants appealed against the Commissioner (Appeals) finding that Modvat credit would not be available on blow bar and breaker bar used in their mining area. The Central Excise Authorities observed that Modvat credit amounting to Rs. 1,09,312/- was not admissible as the items were deemed to be used in the mining area, raising concerns regarding the eligibility of the credit.

2. Legal Submissions: The appellant's counsel argued that the blow bar and breaker bar were essential machinery used in the manufacturing of cement, emphasizing the inter-dependency of mining and cement processing operations. Citing precedents like the Kudermukh Iron Ore case and the Shree Cement Limited case, the counsel contended that if the assessee is engaged in both mining and cement production, such machinery should be eligible for Modvat credit.

3. Factory Definition Interpretation: Reference was made to the definition of a factory under Section 2(e) of the Central Excise Act, where the precincts of the premises are included. The counsel asserted that the mining premises should be considered part of the factory, as indicated in the license, thereby justifying the claim for Modvat credit on machinery used in the mining area for crushing limestone.

4. Judicial Decision: The Departmental Representative highlighted previous Tribunal decisions, particularly the Jaypee Rewa Cement case, where it was established that explosives used in the mining area were not eligible for Modvat credit. The absence of licenses issued under Rule 174 was also pointed out, suggesting a lack of eligibility based on precedents.

5. Judgment and Remand: After considering the arguments and case law presented, the judge found it appropriate to remand the matter to the Commissioner (Appeals) for further examination. The judge noted that the mining area being considered part of the factory premises for manufacturing purposes was a crucial aspect not previously argued before the Larger Bench. Hence, the appeal was allowed by way of remand for a detailed review in light of the factory definition under Section 2(e) and Rule 174 of the Central Excise Rules, 1944.