Modvat credit for inputs used outside the factory premises is not admissible under Rule 57A.

Modvat credit under Rule 57A is available only for inputs brought into the approved factory and used in or in relation to manufacture of final products. Explosives used solely in mines outside the factory premises did not satisfy that requirement, so the claimed credit was not admissible. A remand based on verification of adjacency between the mines and the factory was set aside because the controlling principle excluded inputs used outside the factory.

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Issues: Admissibility of Modvat credit under Rule 57A on explosives used in mines, and whether such explosives qualified as inputs brought into the factory for use in or in relation to manufacture.

Analysis: The approved factory premises did not include the mines. The issue had already been settled against the assessee by the Larger Bench, which held that inputs for which Modvat credit is claimed must be brought into the factory for use in or in relation to manufacture of the final products. Applying that principle, the claimed credit on explosives used in the mines could not be sustained.

Conclusion: Modvat credit on the explosives used in the mines was not admissible. The order remanding the matter for verification of adjacency between the mines and the factory was set aside, and the Revenue's appeal succeeded.

Ratio Decidendi: Modvat credit under Rule 57A is available only for inputs brought into the factory and used in or in relation to the manufacture of final products; materials used solely in mines outside the approved factory premises do not qualify.

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