Modvat credit on mine explosives denied where limestone mines were not treated as part of the factory.

Modvat credit on explosives used in limestone mines for cement manufacture was held inadmissible where the mines were outside the factory area. The Tribunal applied the Larger Bench view that explosives used in mines away from the factory do not qualify for credit, and it ruled that a mine cannot be treated as part of the factory within the meaning of Section 2(e) of the Central Excise Act. Mere proximity or adjacency to the factory did not change that legal position, so credit was denied.

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Issues: Whether Modvat credit was admissible on explosives used in limestone mines for the manufacture of cement, including where a mine was stated to be adjoining the factory.

Analysis: The Tribunal applied the Larger Bench view that explosives used in mines away from the factory do not qualify for Modvat credit. It held that a mine cannot be treated as part of the factory within the meaning of Section 2(e) of the Central Excise Act, and that proximity to the factory does not alter that legal position.

Conclusion: Modvat credit on explosives used in the mines was held not admissible, and the appeal by the revenue succeeded.

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