Modvat credit on mining equipment used to transport limestone to the factory is admissible under settled precedent.

Modvat credit under Rule 57Q is admissible on crushers, conveyor belts and related parts installed at mines where they are used to obtain crushed limestone and move it to the factory for cement manufacture. The governing principle is that capital goods and material-handling equipment used to transport raw material from the mining site to the factory can qualify for credit when supported by settled precedent on identical facts. The discussion relies on the Supreme Court's later view in Birla Corporation Ltd. and similar decisions accepting such claims, so the Revenue cannot insist on a contrary position on the same factual matrix.

---

---

Issues: Whether Modvat credit under Rule 57Q was admissible on crushers, conveyor belts and their parts installed at the mines for obtaining crushed limestone and transporting it to the factory for use in manufacture of cement.

Analysis: The application under Section 35H raised the question whether the mining site, crusher and conveyor belt system formed part of the factory precincts for the purpose of Modvat credit. The Court noted that the controversy stood covered by the Supreme Court's later decision in Birla Corporation Ltd., which held that ropeways and spare parts used to transport raw material from mines to the factory were eligible for credit. The Court also noticed the settled line of decisions accepting similar claims in respect of equipment used to bring raw material to the factory, and held that the Revenue could not be permitted to take a different stand on identical facts.

Conclusion: Modvat credit was admissible on the crusher and conveyor belt system used for transporting limestone from the mines to the factory, and the assessee's claim succeeded.

Ratio Decidendi: Capital goods and material handling equipment used in a mining area for transporting raw material to the factory for manufacture are eligible for Modvat credit under Rule 57Q when the issue is covered by settled precedent on identical facts.

---