2010 (7) TMI 179 - SCH - Central Excise

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 ... MODVAT/CENVAT credit on inputs - explosives, lubricating oils etc. - Capital Goods - HELD THAT:- MODVAT/CENVAT credit on inputs (explosives, lubricating oils etc.) is concerned, the issue is squarely covered by the decision of this Court in the case of Vikram Cement [2006 (1) TMI 130 - SUPREME COURT]. Therefore, the appeals, where credit on inputs is concerned, are allowed. As regards the MODVAT/CENVAT credit on capital goods, if the mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, MODVAT/CENVAT credit on capital goods will be available to the assessee. On the other hand, if the mines are not captive mines but they supply to various other cement companies of different assessees, and it is found that the said goods were being used in the lime stone mines outside the factory of the assessee, MODVAT/CENVAT credit on capital goods used in such mines will not be available to the concerned assessee under the appropriate MODVAT/CENVAT Rules. In order to get a clear finding on the issue, all the matters are remanded to the respective original authorities for decision only on the above issue. Appeals are disposed of accordingly. 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.