2018 (1) TMI 1690 - AT - Central Excise

Supreme Court Upholds Cenvat Credit for Integrated Units

The Supreme Court dismissed the Department's appeal against the Order-in-Original setting aside the demand for reversal of Cenvat Credit. The Court ... Waiver of demand of reversal of Cenvat Credit - manufacture of cement - captive consumption - two units having separate Central Excise registrations known as unit I and II are owned by a common owner - HELD THAT:- Hon’ble Supreme Court in the case of MADRAS CEMENTS LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI [2010 (7) TMI 179 - SC ORDER] has held that As regards the Modvat/Cenvat credit on capital, goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods will be available to the assessee. Further, the Tribunal in the assesee’s own case MAIHAR CEMENT UNIT NO. 2 VERSUS COMMISSIONER OF CENTRAL EXCISE, BHOPAL [2012 (8) TMI 840 - CESTAT NEW DELHI] has held that As such the mines which were allotted to Maihar Cement at the time of its incorporation and subsequently allowed to be used by the second entity, i.e., Maihar Cement Unit No. 2 has to be treated as captive mines for both the units. There are no reason to interfere with the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue. Issues:Department's appeal against Order-in-Original setting aside demand of reversal of Cenvat Credit.Analysis:The case involved appeals by the Department against an Order-in-Original dated 06/12/2016. The appellant, engaged in cement manufacturing with two units under a common owner, had the demand of reversal of Cenvat Credit set aside by the Original Authority, leading to the Department's appeal. The Hon'ble Supreme Court's observations in a related case emphasized the availability of Modvat/Cenvat credit on capital goods for integrated units with captive mines, which was pivotal in this matter.The appellant's claim was allowed by lower Authorities based on the Supreme Court's guidance, leading to the Department's appeal. The Tribunal had previously dismissed the departmental appeal in the appellant's case, establishing a precedent. The commonality of mining operations for both units was highlighted during arguments, further reinforcing the integrated nature of the units.In a related case involving the same parent company, the Tribunal had previously held that separate Central Excise registrations do not determine the status of units, emphasizing the common ownership and operational integration. The Tribunal's decision in this case aligned with the earlier ruling, finding no reason to interfere with the Commissioner (Appeals) order, ultimately dismissing the Department's appeals. The judgment was pronounced in open court, concluding the legal proceedings.