Customs, Excise and Gold Tribunal - Bangalore
Commissioner Of Central Excise vs India Cements Ltd. on 7 December, 2004
Equivalent citations: 2005(182)ELT398(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. In all these twenty-three appeals, the appellant is CCE, Hyderabad and the respondent is M/s. The India Cements Ltd in Appeal Nos (l) E/1140/2002; (2) E/1128 to 1137/2002 and (3) E/1116 to 1127/2002. All these appeals have been filed by the Revenue against the following OIAs passed by the Commissioner of Central Excise, Hyderabad,
(i) O-I-A No. 28/2002 (H-II) C.E., dated 31-7-2002
(ii) O-I-A Nos. 29 to 38/2002 (H-II) C.E., dated 31-7-2002
(iii) O-I-A Nos. 4 to 15/2002 (H-II)(D) C.E., dated 31-7-2002
2. The issue relates to the entitlement of Modvat credit on certain inputs and capital goods. The Revenue feels that the order of the Commissioner (Appeals) allowing the credit in respect of these items is wrong. Hence the appeals of the Revenue.
3. The following are the items involved in respect of the appeals.
(i) Lubricants used in Mines
(ii) Explosives used in Mines
(iii) The following capital goods
(a) Power Pack
(b) Assembled Flexible Connection
(c) Dumper Tyres, Tubes and Flaps
(d) Lubricants, Greases and Coolants used in Mines Moreover, the Revenue is also challenging the allowances of Modvat credit in respect of certain defective invoices issued by IOC Ltd.
4. Lubricants and explosives :
The Commissioner (Appeals) relied on the Supreme Court decision in the case of M/s. Jaypee Rewa Cement v. CCE, M.P. - 2001 (133) E.L.T. 3 (S.C.) in allowing the Modvat credit on lubricants and explosives used in mines.
5. The Revenue has contended that in the respondents' own case, the CEGAT, Chennai, in its Final Order No. 1742 to 1752/2001, 2002 (147) E.L.T. 393 (Tribunal) dated 4-10-2001 held that lubricating oils used in the lubrication of machinery which are used exclusively in the Mines and is not relatable to the final products viz. Cement, is not eligible for Modvat credit. It has also been urged that after the decision of the Jaypee Rewa Cement case, there has been an amendment in the definition of the 'input' and w.e.f. 1-4-2000, the inputs should be used within the factory. Hence, w.e.f. 1-4-2000 the ratio of Jaypee Rewa Cement case will not be applicable.
6. Shri L. Narasimha Murthy, learned SDR appeared for the appellant and Shri V. Ravindran, learned Consultant appeared for the respondents.
7. On a careful consideration of the entire issue, we arrive at the following conclusions: It is a fact that after 1-4-2000, the term 'inputs' refers to items used within the factory premises only. By no stretch of imagination, 'mines' can be considered as 'factory premises'. This has been decided by the Hon'ble Supreme Court in the case of CCE, Jaipur v. ),K. Udyog Ltd. - 2004 (171) E.L.T. 289 (S.C.) = 2004 (96) ECC 73 (S.C.). Under these circumstances, we hold that Modvat credit on lubricants and explosives used in Mines is not admissible. Hence, the OIA Nos. 28/2002 (H-II) C.E., dated 31-7-2002 and 29 to 38/2002 (H-II) C.E., dated 31-7-2002 are set aside and the departmental appeals E/1140/2002 and E/1128 to 1137/2002 are allowed.
8. Capital Goods : In respect of the appeals against the OIA Nos. 4 to 15/2002 (H-II)(D) C.E., dated 31-7-2002, we have to record the following findings :
Power Pack : Relying on Supreme Court's decision in CCE, Coimbatore v. Jawahar Mills Ltd. - 2001 (132) E.L.T. 3 (S.C), the Commissioner (Appeals) has allowed the Modvat credit on Power Pack. However, the Revenue contend that Power Pack falling under CH 8473.00 lies in the excluded category under Rule 57Q. Since the item is in the excluded category, the same is not entitled for Modvat.
Assembled Flexible Connections : These are spares used in logo engines used for bringing raw material into the factory. According to Revenue, locomotives falling under CH 8607.00 is excluded under Rule 57Q. Hence, Assembled Flexible Connections which is a spare of the locomotive engine is not entitled for Modvat Credit. The Revenue's contention is correct. Hence, no Modvat is available to these items.
Dumper, Tyres, Tubes and Flaps : The Revenue contended that the CEGAT, Chennai, in its Final Order No. 2295, dated 6-6-1999 [2000 (118) E.L.T. 700 (Tribunal)] in the case of the respondents, held that excavators and dumpers used in mines are not entitled for Modvat credit. The dumpers are used in transportation of raw materials. The Supreme Court in the case of Collector of Central Excise v. Rajasthan State Chemical Works -1991 (55) E.L.T. 444 (S.C.) observed that the processing of handling raw materials is also in or in relation to manufacture if integrally connected with further operations leading to manufacture of goods. The dumpers are used both in mines and factories. As long as they are not exclusively used in mines, they are entitled for Modvat credit. Hence, the dumper, tyres, tubes and flaps which are used in dumpers used in both mines and factories are entitled for Modvat credit.
9. The Commissioner (Appeals) allowed credit in respect of an invoice which showed less amount of duty than the amount of credit availed. The Commissioner has observed that the payment of duty is a question of fact and in view of the clarification given by M/s. IOC Ltd., she has remanded the matter to the adjudicating authority. The Revenue has come in appeal on the ground that w.e.f. 11-5-2001, the Commissioner (Appeals) has no power to remand. The contention of the Revenue is not correct as the Commissioner still has powers of remand as per the interpretation of the Gujarat High Court decision. Hence the Commissioner (Appeals)'s order of remand is upheld.
10. The appeals E/1116 to 1127/2002 are disposed of in the above terms.