SC allows MODVAT/CENVAT credit on explosives, restricts capital goods credit to captive mines integrated with cement factories

SC held that MODVAT/CENVAT credit on inputs such as explosives and lubricating oils is allowable, following its earlier decision in Vikram Cement. For capital goods, credit is permissible only where the mines are captive and form an integrated unit with the cement factory. If the mines are not captive and supply limestone to multiple cement manufacturers, and the capital goods are used in mines outside the assessee's factory, such credit is not available under the MODVAT/CENVAT Rules. All matters are remanded to the original authorities for fresh decision on this limited issue.

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The Supreme Court ruled on the eligibility of MODVAT/CENVAT credit on inputs and capital goods used in mines. Credit on inputs like explosives and lubricating oils is allowed based on a previous decision. For capital goods, credit is available if mines are captive to the cement factory, but not if they supply to other companies. Cases are remanded for further decision. No costs awarded.

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