Cenvat credit for mining explosives upheld where limestone is an intermediate product used in cement manufacture.

Cenvat credit was admissible on explosives used in mines to extract limestone, because the limestone functioned as an intermediate product used in the manufacture of cement. The Tribunal applied earlier rulings and the Supreme Court view that explosives used for producing limestone can qualify as inputs used in or in relation to manufacture under the Modvat and Cenvat regimes, and treated the relevant input definition as materially consistent across both regimes. The order denying credit was therefore set aside, and eligibility to credit on explosives used for mining limestone was upheld in favour of the assessee.

---

---

Issues: Whether Cenvat credit was admissible on explosives used in mines for extraction of limestone used in the manufacture of cement.

Analysis: The dispute turned on whether explosives used in the mines could be treated as inputs used in or in relation to the manufacture of the final product through the intermediate product, namely limestone. The decision followed earlier Tribunal rulings and the Supreme Court ruling recognising credit where explosives are used for producing limestone that is further used in cement manufacture. The Tribunal also treated the relevant definition of input under the Cenvat regime as materially consistent with the earlier Modvat provisions.

Conclusion: Cenvat credit on explosives used in the mines was admissible and the issue was decided in favour of the assessee.

Final Conclusion: The order denying credit was set aside and the appeal succeeded on the question of eligibility to credit on explosives used for mining limestone.

Ratio Decidendi: Explosives used in mines to obtain limestone that is used as an intermediate product in cement manufacture qualify for credit as inputs used in relation to manufacture under the applicable Modvat and Cenvat regime.

---