2001 (4) TMI 493 - AT - Central Excise

Tribunal rules explosives for mine excavation outside factory not eligible for Modvat credit under Rule 57A

The Tribunal upheld the Commissioner's decision, ruling that explosives used for excavating limestone in mines outside the factory do not qualify for ... Modvat Issues:1. Entitlement to Modvat credit on explosives used for excavating limestone in mines outside the factory.2. Admissibility of waiver or pre-deposit condition pending Apex Court or Reference High Court decisions.3. Application of Tribunal judgments on Modvat credit eligibility for items used outside the factory.Entitlement to Modvat credit on explosives used for excavating limestone in mines outside the factory:The Commissioner dismissed the appeals, citing the precedent set by a 5-Member judgment of the Tribunal in a similar case. The judgment stated that activities outside the factory, such as mining for raw materials, do not constitute part of the manufacturing process. Therefore, explosives used in mines away from the factory do not qualify as 'goods used in or in relation to the manufacture of cement' for Modvat credit under Rule 57A of the Central Excise Rules, 1944. The Commissioner applied this precedent and rejected the appeals.Admissibility of waiver or pre-deposit condition pending higher court decisions:The Consultant sought a waiver or a 50% pre-deposit condition, citing pending matters in the Apex Court and Reference High Courts. However, the DR argued that the issue had been conclusively settled by previous Tribunal judgments, making any further challenge unwarranted. The DR emphasized that the Tribunal's decision was binding on all Co-ordinate benches, and the appeals should be dismissed without granting any waiver or keeping the matter pending.Application of Tribunal judgments on Modvat credit eligibility for items used outside the factory:The Tribunal agreed with the DR, emphasizing that the issue had been consistently decided by Larger Bench judgments. The explosives were used outside the factory, and the Tribunal had consistently ruled that Modvat credit cannot be claimed for items used outside the factory premises. The Consultant's claim that the mines were inside the factory was rejected as unsubstantiated, as no documents or approved plans were presented to support this assertion. The Tribunal upheld the Commissioner's decision based on the Larger Bench judgment, dismissing the appeals and rejecting the stay applications.In conclusion, the Tribunal upheld the Commissioner's decision, emphasizing the precedent set by previous judgments regarding Modvat credit eligibility for items used outside the factory premises. The appeals were dismissed, and no waiver or pre-deposit condition was granted, as the issue had been conclusively settled by the Tribunal's consistent rulings.