Commissioner of Central Excise Vs. Associated Cement Companies Ltd. - Court Judgment

Excerpt:
1. the revenue filed these appeals against the common impugned order passed by the commissioner of central excise (appeals). in the impugned order, the benefit in respect of explosives used in the mines for obtaining lime-stone for the manufacture of cement was allowed.2. ld. dr appearing on behalf of the revenue, submits that the explosives are used in the mines which are not part of the factory.therefore, the benefit of modvat credit, as an input cannot be granted to the explosives. he submits that the explosives are used for blasting in the lime-stone mines, which are not part of factory as defined under section 2(e) of the central excise act. he, therefore, relies upon the decision of the larger bench of the tribunal in the case of jaypee rewa cement v. c.c.e. reported in 2000 (38).....

Judgment:
1. The revenue filed these appeals against the common impugned order passed by the Commissioner of Central Excise (Appeals). In the impugned order, the benefit in respect of explosives used in the mines for obtaining lime-stone for the manufacture of cement was allowed.

2. Ld. DR appearing on behalf of the revenue, submits that the explosives are used in the mines which are not part of the factory.

Therefore, the benefit of Modvat credit, as an input cannot be granted to the explosives. He submits that the explosives are used for blasting in the lime-stone mines, which are not part of factory as defined under Section 2(e) of the Central Excise Act. He, therefore, relies upon the decision of the Larger Bench of the Tribunal in the case of Jaypee Rewa Cement v. C.C.E. reported in 2000 (38) RLT 111 and submits that in this case the Tribunal held that the Modvat credit on explosives in the mines is not available. He, therefore, prays that the appeals be allowed.

3. Ld. Counsel appearing on behalf of the respondents, submits that in one case, mines, where the explosives is used, is almost 11 kms away from the factory. He, further, submits that one of the mines is situated adjoining the factory of the appellants. His contention is that the explosives used in the mines which are adjoining the factory, where cement is manufactured, are entitled for the benefit of Modvat credit even in view of the above mentioned Larger Bench decision. He, therefore, prays that the appeals be dismissed.

5. In these cases, the issue is in respect of Modvat credit on explosives used in the mines for getting lime-stone. The Larger Bench of the Tribunal in the case of Jaypee Rewa Cement (supra) held that Modvat credit is not admissible to the explosives used in the mines, which are away from the factory. In the present case, admittedly, one of the mines is 11 kms away from the factory. The contention of the respondents is that one of the mines is adjoining the factory. I find no force in the arguments as the mine cannot be a part of the factory.

Mine may be situated near the factory, but it cannot be factory as defined under Section 2(e) of the Central Excise Act. In view of the above mentioned decision of the Larger Bench, relied upon by the revenue, the impugned order is set aside and the appeals are allowed.