Cenvat credit for explosives in captive mines upheld where the mines formed an integrated unit with the cement factory.

Cenvat credit on explosives used in captive mines forming an integrated unit with a cement factory was held admissible, because use within the factory premises was not a necessary condition where the mines served the manufacturing unit. The Tribunal also reiterated that subordinate authorities must follow binding declarations of law by the Supreme Court and High Court under Article 141, and cannot disregard them on the ground that the assessee was not a party to those cases. The denial of credit was therefore unsustainable and the adverse order was set aside.

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Issues: (i) Whether cenvat credit on explosives used in captive mines supplying a cement factory was admissible. (ii) Whether the authorities below could disregard binding decisions of superior courts while deciding the credit dispute.

Issue (i): Whether cenvat credit on explosives used in captive mines supplying a cement factory was admissible.

Analysis: The credit dispute concerned explosives used in the assessee's captive mines. The Tribunal noted that the Supreme Court had clarified that when mines are captive mines forming an integrated unit with the cement factory, credit is available, and that use within the factory premises is not a necessary condition. The departmental record did not dispute the captive character of the mines.

Conclusion: The credit on explosives used in the captive mines was admissible and the assessee was entitled to it.

Issue (ii): Whether the authorities below could disregard binding decisions of superior courts while deciding the credit dispute.

Analysis: The Tribunal held that once the High Court had reversed the earlier view and the Supreme Court had already declared the governing principle, those decisions bound all authorities under Article 141 of the Constitution of India. Refusal to follow them merely because the assessee was not a party to those cases was held to be legally unsustainable and contrary to judicial discipline.

Conclusion: The authorities below could not ignore the binding decisions of the superior courts, and the adverse findings were set aside.

Final Conclusion: The denial of cenvat credit was unsustainable, and the appeal succeeded with the impugned order set aside.

Ratio Decidendi: Binding declarations of law by superior courts must be followed by all subordinate adjudicatory authorities, and cenvat credit is admissible on goods used in captive mines forming an integrated unit with the cement factory.

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