Cement used as mine construction material is not an input for Cenvat credit under the manufacturing test.

Cement used in mines for construction, repair, maintenance or filling gaps was treated as building material and not as an input used in relation to manufacture, so it did not satisfy the statutory test for Cenvat credit under the Cenvat Credit Rules, 2002. The Rajasthan HC held that the Supreme Court ruling in Vikram Cement did not assist the assessee on the facts. The alternative argument that cement could be treated as capital goods was not examined because it had not been the basis of the case before the Tribunal.

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Issues: Whether cement used as construction or building material in mines qualifies as an eligible input for Cenvat credit under the Cenvat Credit Rules, 2002.

Analysis: The Court held that cement used in mines for construction, repair, maintenance, or filling gaps is essentially building material and is not used as an input in relation to manufacture of the final product. The reliance on the Supreme Court decision in Vikram Cement was held not to assist the assessee on the facts, and the alternative contention that cement could be treated as capital goods was not examined because it was not the basis on which the matter had been argued before the Tribunal. Applying the definition of input and the requirement that the material be integrally connected with the manufacturing process, the Court concluded that cement used in the mining area did not satisfy the statutory test for Cenvat credit.

Conclusion: The answer is in the negative. Cement used as construction or building material in the mines is not eligible for Cenvat credit as an input.

Ratio Decidendi: A material used only as building or construction material for maintenance or repair of mining premises is not an input used in relation to manufacture and therefore does not qualify for Cenvat credit.

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