Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs India Cements Ltd. on 3 April, 1996
Equivalent citations: 1999(110)ELT954(TRI-CHENNAI)
ORDER T.P. Nambiar, Member (J)
1. Since the matter involved in these two appeals arises out of the same order, we propose to disposal of these cases by a common order.
2. Appeal No. E/413/93 is the appeal filed by the C.C.E., Madurai, challenging the orders of C.C.E. (Appeals), in granting Modvat benefit to the respondent therein in respect of high explosives (Ammonium nitrate) used by the respondent in mining operations for blasting lime stone from quarries.
3. The learned DR contended before us that high explosives is used by the respondent in their own mining operations for blasting lime stone from quarries. He stated that the product obtained by such blasting is only lime stone, which is an exempted product. For the manufacture of cement lime stone is an input and not high explosives. Therefore it was his contention that high explosives are not used in relation to the manufacture of cement and no Modvat credit is admissible.
4. The learned Consultant Shri Kuppuswami, submitted that the words "used in relation to the manufacture" are very wide and hence Modvat credit is available for the above item. He relied upon the decision of the East Regional Bench in the case of ACC v. CCE reported in 1991 (55) E.L.T. 415.
5. We have considered the submissions. The decision of the East Regional Bench cited supra supports the case of the Respondent. This decision was followed in the impugned order. But South Regional Bench in the case of CCE, Bangalore v. ACC decided on 4-12-1995 in Order No. 728/1995 in Appeal No. E/728/92 has restricted the benefit of Modvat credit to explosives, only if the quarrying is done in licensed factory premises for obtaining lime stone which in turn is used for manufacture of cement.
6. In view of the conflicting decisions of the two Benches of the Tribunal we refer the following questions to the Hon'ble President for resolving the question of law by a larger Bench:
"Whether in the facts and circumstances as narrated, Modvat credit is admissible to the respondent on high explosives used in mining operations for blasting lime stone which is used in the manufacture of cement".
7. Appeal No. E/423/93 is an appeal filed by M/s. India Cements Ltd. against the very same order in terms of which CCE disallowed Modvat credit for grinding media in the shape of balls used in coal mills in relation to the manufacture of cement. The learned Consultant contended before us that a wider meaning should be given to the expression "used in relation to manufacture". He thus contended that grinding balls are used in the manufacture of cement and also gets consumed in that process and therefore it is an input used in relation to the manufacture of cement.
8. But the learned DR stated that grinding media is in the form of balls used in coal mill. Its purpose is to crush the input/raw material. Hence it cannot be considered as inputs used in or in relation to the manufacture of cement although in course of time they get consumed.
9. We have considered the submissions. We find that in the following cases the Tribunal has taken a view that this grinding media is an input used in relation to the manufacture of cement and Modvat credit was allowed. The cases are as follows :
(1) 1995 (76) E.L.T. 358 (Tribunal) - (Indian Rayon and Industries Ltd. v. CCE.
(2) 1996 (86) E.L.T. 317 (Tribunal) - Magnetix (India Ltd.) v. CCE, Bhuvaneswar.
10. However, another view has been taken by the South Regional Bench in Order No. 782/95, decided on 4-12-1995 wherein at Para No. 5 is held as follows:
"In regard to the Collector's finding that grinding balls are eligible for Modvat credit, we set aside decision following the decision already taken by this Bench and the West Regional Bench holding that grinding balls are not eligible for Modvat benefit under Rule 57A".
Accordingly, we refer the following question of law to the Hon'ble President for resolving the above question of law by a larger Bench :
"Whether in the facts and circumstances of the case, the grinding media used in the manufacture of cement is an input used in or in relation to the manufacture of cement and is entitled for the Modvat credit."
11. Lastly the learned Consultant for the appellant (India Cements Ltd.) contended that lignite and lining matter are also inputs used in the manufacture of cement. But the lining plates and lignites are part and parcel of the equipment itself and cannot be termed as inputs used in relation to the manufacture of cement and the reasoning of the lower authority is correct. This part of the order is confirmed.