2002 (5) TMI 672

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..... dling machinery, apart from the crusher. The crusher and other machinery require lubrication which is imparted through lubricating oils and greases. During July-September, 1999, the appellants took Modvat credit of Rs. 20,734/- on such lubricants, treating the goods as capital goods under Rule 57Q. A dispute arose in this regard between the appellants and the Department, which was adjudicated by the jurisdictional Asstt. Commissioner, who disallowed the Modvat credit after holding that the lubricants which were used in the mine and not in the factory as required under Rule 57Q were not eligible for the credit under the said Rule. The party went in appeal before the Commissioner (Appeals). The lower appellate authority rejected the appeal, f .....

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..... ch amounted to manufacture as held in the cited cases, was an activity integrally connected with the process of manufacture of cement and, therefore, the lubricants used for lubricating the crusher and other material-handling machinery should be held to have been used in relation to the manufacture of cement. In this manner, ld. Counsel seeks to apply the provisions of Rule 57Q to the lubricants. Ld. JDR opposes this argument by submitting that any capital goods to qualify for the credit under Rule 57Q should have been used in the factory of production of cement. Ld. DR submits that neither the limestone mine nor the site of the crusher was comprised in the ground plan of the factory approved by the proper officer under Rule 44 of the Cen .....

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..... ill be held to be ineligible capital goods. I am following the ratio of the decision of the Two Member Bench, in view of the fact that there is no stay of operation of that decision. To my mind, the case law cited by ld. Advocate is in a different context. Even if it be assumed that the case law has any bearing on the facts of this case, it has to be noted that both the decisions (in Duraiappa and Sunderson) are per incuriam in the light of the Supreme Court s decision in Hyderabad Industries case [1995 (78) E.L.T. 641 (S.C.)], wherein it was held that the activity of separation of asbestos fibre from asbestos rock albeit by a complex operation did not amount to manufacture within the meaning of Section 2(f) of the Central Excise Act. 4 .....

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