Integrated units under common balance sheet with captive mines entitled to shared Cenvat credit on capital goods

CESTAT held that two manufacturing units of the same parent company, not separate legal persons and operating under a common balance sheet, constitute an integrated unit with captive mines. Because the mines do not supply other assessees and were allotted to the first unit but used by both, Cenvat/Modvat credit on capital goods related to those mines is available to both units. Decision rendered in favour of the assessee, following relevant SC precedent.

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Issues:
Entitlement to credit of duty paid on stone crushers and parts used in mines for crushing limestone and transportation to factory.

Analysis:
The central issue in this appeal was whether the appellant is entitled to credit of duty paid on stone crushers and their parts used in the mines for crushing limestone and transporting it to the factory. The lower authorities had denied the credit, citing that the mines were not captive mines of the appellant. The Commissioner (Appeals) noted that both the mines served Maihar Cement and Maihar Cement Unit No. 2, the appellant, and concluded that the mines were captive mines of Maihar Cement, not of Maihar Cement Unit No. 2. The appellant argued that despite separate registration with the central excise authorities, both units belonged to the same parent company and should be treated as one entity under the law. It was clarified that the mines exclusively served both units, and no crushed limestone was supplied to any outside unit, justifying the appellant's entitlement to credit.

The Tribunal found that the dispute revolved around whether the mines were captive mines of Maihar Cement Unit No. 2. The lower authorities' emphasis on separate registration under the Central Excise law was deemed irrelevant in determining the status of the units. It was established that both Maihar Cement and Maihar Cement Unit No. 2 were units of the same parent company, sharing a common balance sheet, and lacking independent legal status. Consequently, the mines allocated to Maihar Cement and subsequently used by Maihar Cement Unit No. 2 were considered captive mines for both units, aligning with the legal precedent set by the Supreme Court in the Vikram Cement case.

Additionally, the Tribunal referenced a prior decision concerning Maihar Cement allowing credit for cement items and highlighted the Supreme Court's ruling in the Madras Cement case, supporting the appellant's position since the mines did not supply to other assesses' factories. Considering the arguments and legal precedents, the Tribunal set aside the lower order, allowing the appeal and granting consequential relief to the appellant.

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