2014 (5) TMI 679 - AT - Central Excise

Tribunal: Cenvat Credit for Mines Requires Proximity to Factory

The Tribunal held that Cenvat credit for items used in mines outside the factory is not admissible unless the mines are adjacent to or connected by ... Cenvat/Modvat Credit - Capital goods - Whether the Cenvat credit is admissible in respect of explosive, Ammonium Nitrate and Detonators, which are used in mines for blasting/fragmenting the solid lime rocks situated outside the factory - mines is situated far away from the factory i.e., 40 Kms - Held that:- Supreme court in the case of Vikram Cement Vs Commissioner of Central Excise, Indore reported in [2006 (2) TMI 1 - Supreme court] has held that, credit is eligible if the mines are captive mines so that they are integrated with the concerned cement factory. - Decided in favour of assessee. Issues:Admissibility of Cenvat credit for explosive, Ammonium Nitrate, and Detonators used in mines situated outside the factory.Analysis:The main issue in this case revolves around the admissibility of Cenvat credit for items used in mines located outside the factory. The appellant argued that the mines in question are captive mines integrated with the cement factory, citing a relevant Supreme Court judgment and a government order to support their claim. On the other hand, the revenue contended that the mines were situated 40 kilometers away from the factory, not meeting the criteria of being adjacent or connected by railway as per the Supreme Court ruling. The Tribunal, after examining the precedent set by the Supreme Court in the Vikram Cement case, concluded that the credit of duty would not be available for input and capital goods in mines that are not adjacent to or connected by railway to the factory. Therefore, the impugned orders were set aside, and the appeal was allowed with consequential reliefs.This judgment underscores the importance of the physical proximity of mines to the factory in determining the admissibility of Cenvat credit for items used in mining operations. The decision heavily relies on the interpretation of the Supreme Court ruling in the Vikram Cement case, emphasizing the requirement for mines to be either adjacent to the factory or connected by railway to qualify for such credit. The Tribunal's analysis highlights the significance of compliance with these specific criteria to claim Cenvat credit, ensuring alignment with established legal principles and precedents. The judgment serves as a reminder for businesses to carefully assess the location and connectivity of their mines concerning the factory to determine the eligibility for availing Cenvat credit in similar situations.