Modvat credit for capital goods in mines turns on whether the mines form part of the approved factory plan.

Modvat credit under Rule 57Q depended on whether capital goods used in the mines were used in premises forming part of the factory within the approved ground plan. The appellate authority had rejected credit without examining the assessee's specific claim that some mines were included in the approved factory plan. Because the record did not support a conclusive finding for all mines, the factual position required verification. The order was set aside and the matter remanded to the Commissioner (Appeals) to determine whether the mines fell within the approved ground plan and whether the goods were used in the factory; if so, credit would be admissible.

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Issues: Whether Modvat credit under Rule 57Q was admissible on capital goods used in the mines, depending on whether the mines formed part of the factory within the approved ground plan.

Analysis: The question turned on whether the area where the goods were used was part of the factory as defined under Section 2(e) of the Central Excise Act and comprised in the ground plan approved under Rule 44 of the Central Excise Rules. The lower appellate authority denied credit without examining the assessee's specific plea that some mines were covered by the approved factory plan. The record and the material placed did not permit a conclusive finding for all the mines, and the factual issue required verification at the first appellate stage.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) to determine whether the mines were within the approved ground plan and whether the goods were used in the factory. If so found, Modvat credit would be admissible.

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