Cenvat credit on cement used for mine pit back-filling upheld as input linked to ore extraction

Cement used for back-filling mine pits as a statutory prerequisite to ore extraction was treated as an input under Rule 2(k) of the Cenvat Credit Rules, because the definition of input is wide and the exclusion applies only to goods having no relationship whatsoever with manufacture. The cement was used in an activity integrally connected with ore extraction, which was regarded as the relevant manufacturing process for credit purposes. Cenvat credit was therefore admissible.

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Issues: Whether cement used for filling mine pits as a mandatory step for ore extraction qualifies as an input under Rule 2(k) of the Cenvat Credit Rules, 2004, so as to entitle the assessee to Cenvat credit.

Analysis: The definition of input under Rule 2(k) is wide and covers all goods used in the factory by the manufacturer, subject to the express exclusions. The exclusion for goods having no relationship whatsoever with the manufacture of the final product must be applied strictly. The record showed that under the mining permission and the applicable mining regulation, back-filling of the extracted ore pits with cement was a statutory and operational prerequisite before ore extraction could proceed. The cement was therefore used in an activity integrally connected with extraction of ore, which was treated as the relevant manufacturing process for the purposes of credit. The circular relied upon also supported the view that only goods having absolutely no relationship with manufacture are excluded.

Conclusion: Cement used for filling the ore pits was an input within Rule 2(k), and Cenvat credit was admissible to the assessee.

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