Cenvat credit in captive mines restored after the precedent used to deny credit was overruled by the Supreme Court.

Cenvat credit on inputs and capital goods used in captive mines was examined with reference to a denial founded on J.K. Udaipur Udyog Ltd. The Tribunal noted that this precedent had been overruled by the Supreme Court in Vikram Cement, so the legal basis for refusing credit no longer survived. On that footing, the appellate order sustaining the denial was unsustainable in law, and the assessee's claim to Cenvat credit was accepted.

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Issues: Whether Cenvat credit on inputs and capital goods used in captive mines was admissible when the denial was based on a precedent subsequently overruled by the Supreme Court.

Analysis: The Tribunal noted that the Commissioner (Appeals) had relied on J.K. Udaipur Udyog Ltd. to deny credit, but that ruling stood overruled by the Supreme Court in Vikram Cement. Once the controlling precedent was displaced, the basis for sustaining the denial of Cenvat credit disappeared. The Tribunal therefore found the impugned appellate order to be unsustainable in law.

Conclusion: The denial of Cenvat credit could not be sustained and the appeal was allowed in favour of the assessee.

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