Modvat credit on explosives used in outside mines denied for lack of nexus with manufacture.

Modvat credit was denied on explosives used in mines located outside the factory because mining was treated as an activity anterior to manufacture, not part of the cement manufacturing process. The tribunal applied binding Larger Bench precedent and held that such explosives were not goods used in or in relation to manufacture, so they lacked the required nexus for input credit under the relevant Modvat rule. The request for remand or adjournment was rejected because the issue had already been settled by precedent and no stay operated against it.

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Issues: Whether Modvat credit was admissible on explosives used in mines situated outside the factory for manufacture of cement.

Analysis: The appeals were governed by the Larger Bench ruling that mining activity outside the registered factory is anterior to manufacture and does not form part of the manufacturing process. Explosives used in such mines are therefore not goods used in or in relation to the manufacture of cement and do not qualify as inputs for Modvat credit under the relevant rule. The plea for remand or adjournment was not accepted, as the issue stood concluded by binding precedent and no stay of that precedent existed.

Conclusion: Modvat credit on explosives used in mines outside the factory was not admissible, and the denial of credit was sustained.

Ratio Decidendi: Inputs used in mining activity outside the factory, being antecedent to manufacture, are not eligible for Modvat credit as they lack the required nexus with the manufacturing process.

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