Custom, Excise & Service Tax Tribunal
Associated Cement Companies Ltd vs Cce Belgaum on 28 April, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/EH/87 & 88/08 & E/830 & 831/2006
[Arising out of Order-in-Appeal No.76/2004-C.Ex dated 3.3.2004 and OIA No.74/2004-C.Ex. dated 3.3.2004 passed by the Commissioner of Central Excise (Appeals), Mangalore]
For approval and signature:
Honble Mr. P.G.CHACKO, Member (Judicial)
Honble Mr. P.KARTHIKEYAN, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Associated Cement Companies Ltd.
Appellant/s
Versus
CCE Belgaum
Respondent/s
Appearance :
Mr.Srirangan, Advocate Dr.Nitish Birdi, SDR For the Appellant/s For the Respondent/s CORAM:
Mr. P.G. Chacko, Member (Judicial) Mr. P. Karthikeyan, Member (Technical) Date of hearing : 28.4.2008 Date of decision : 28.4.2008 Final Order No.____________ Per P.G.CHACKO After examining the records and hearing both sides, we are of the view that the appeals require to be disposed of at this stage. Accordingly, after allowing the applications for out-of-turn disposal of the appeals, we take up the appeals.
2. The appellants are manufacturers of cement. During the period from September 2001 to March 2002, they had taken CENVAT credit on explosives (input) used for blasting limestone in mines claimed to be captive mines. Both the lower authorities denied this benefit to the party. Hence appeal No.E/830/2006. In the month of May 2001, they had also taken CENVAT credit on certain capital goods falling under Chapter 84 of the CETA Schedule, and the same was disallowed by both the lower authorities. The said capital goods were also used in the above limestone mines.
3. Ld.counsel for the appellants submits that the issues are already covered in their favour by the decision of the Supreme Court in Vikram Cement Vs Commissioner of Customs, Indore, 2006 (194) ELT 3 (SC) and the decision of the court in Jaypee Rewa Cement Vs Commissioner, 2003 (113) ECC 195. We have heard ld.SDR also, who reiterates the findings of the lower appellate authority.
4. The question whether explosives used by a cement manufacturer for mining limestone at off-factory site was considered in the case of Vikram Cement (supra) and held in favour of the assessee. It was held in that case that CENVAT credit on such explosives could not be denied on the ground that they were not used within the cement factory. This legal position was re-affirmed in a subsequent case of the same assessee by the apex court in Vikram Cement Vs CCE Indore, 2006 (197) ELT 145 (SC). In the result appeal No.E/830/06 has to be allowed and it is ordered accordingly.
5. As regards the capital goods, used in limestone mines situate away from the cement factory, the case law is apex courts judgement in the second case of Vikram Cement [2006 (197) ELT 145]. In this case, it was held that if the mines were captive mines constituting integrated unit with the cement factory, CENVAT credit would be admissible on capital goods used for the mining activity. If the mines supplied limestone to other cement factories also, the benefit would not be available. In terms of this ruling of the apex court, we queried the counsel as to whether the capital goods in question were used in captive mines. Ld.counsel has not been able to say, for certain, that the capital goods were received in captive mines of the appellants. On a perusal of the records, we have also not found any material indicating that the capital goods were used in captive mines. No wonder why ld.counsel could not answer the query. We have heard ld.SDR also, who has submitted that, case law cited by counsel is not applicable to the capital goods in question if they were not used in captive mines. In order to claim the benefit of the apex courts ruling in relation to capital goods used by a cement manufacturer at off-factory site, the appellants will have to necessarily establish that the subject capital goods were used in captive mines which did not supply limestone to any cement factory of another assessee. In the instant case, the crucial question of fact (whether the limestone mines in which the capital goods were used are captive mines catering to the needs of the assessee only) requires to be addressed by the original authority. Admissibility of CENVAT credit on such capital goods would squarely rest on a decision on the said question. Accordingly, the orders of the lower authorities are set aside and this appeal is allowed by way of remand directing the original authority to pass fresh order of adjudication on the question whether CENVAT credit was available, during the material period, to the assessee in respect of the capital goods used by them for the mining activity. The authority shall decide on this question in terms of this order after giving the assessee a reasonable opportunity of being heard. If it is found that the mines are captive mines catering only to the needs of the assessee, the CENVAT credit will be admissible in respect of the capital goods used in such mines during such period.
6. The appeal No.E.831/2006 stands allowed by way of remand.
(Dictated and pronounced in open court)
(P.KARTHIKEYAN) (P.G.CHACKO)
MEMBER (T) MEMBER (J)
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