TaxTMI 
TaxTMI 
2004 (9) TMI 101
X X X X Extracts X X X X
X X X X Extracts X X X X
.... mining area is at a distance of few kilometers from the plant where the cement is manufactured. Explosives are used for blasting purpose in the mines. During the period April to August 2000, the assessee took CENVAT Credit under Rule 57AB of the Central Excise Rules (for short 'Rules') on the explosives used in mines. The Assistant Commissioner, Central Excise, issued a notice to the assessee on 18-4-2001 on the ground, inter alia, that the explosives used for blasting purpose in the mines had not been used in the factory premises for production or in relation to the manufacture of final product i.e. cement; that as per Rule 57AB, the input must be used within the factory of production and, therefore, the explosives do not qualify to be inputs for the manufacture of excisable goods in terms of the aforesaid rule. The assessee was required to show cause why the aforesaid credit taken by him in contravention of Rule 57AB should not be disallowed and recovered from him under the provisions of Rule 57AH read with section 11A of Central Excise Act and further, why penal action should not be taken under Rule 173(Q)(1)(bb). The assessee gave a reply to the notice on the ground, inter ali....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ise specified under clauses (i), (ii), (iii) and (iv) above, paid on any inputs or capital goods received in the factory on or after the first day of April, 2000. Explanation. - …………..………………………………………………………………… …………..………………………………………………………………… …………..……………………………………………………………….." 4.Rule 57AC of the Rules deals with Conditions for allowing CENVAT Credit and sub-rule (1) thereof reads as under : "(1) - The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer." Rule 57AA gives the definitions and sub-rule (d) thereof reads as under : "(d) "input" means all goods, except high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes accessories of the final products cleared along with the final product, goods used as paint or as packing material, or as fuel, or for generatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r which MODVAT Credit could be taken read as under : "Rule 57A. Applicability. - (1) The provisions of this section shall apply to such finished excisable goods (hereinafter referred to as the "final products"), as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the "'specified duty") paid on the goods used in or in relation to the manufacture of the said final products [whether directly or indirectly and whether contained in the final product or not] (hereinafter referred to as the "inputs") and for utilizing the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restrictions that may be specified in the notification : Provided that Central Government may specify the goods or classes of goods in respect of which the credit of specifie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are used in relation to the manufacture even directly, would be regarded as an input for the purpose of Rule 57A. Sub-rule (1) of Rule 57A does not, in any way, specify that the inputs have to be utilized within the factory premises. The explanation contained in Rule 57A is merely meant to enlarge the meaning of the word "input" and does not in any way restrict the use of the input within the factory premises nor does the said Rule 57A require the inputs to be brought into the factory premises at any point of time." Further under the Scheme for MODVAT the relevant portion of Rule 57F provided as follows : "57F. Manner of utilization of the inputs and the credit allowed in respect of duty paid thereon. - (1) The inputs in respect of which a credit of duty has been allowed under Rule 57A - (i) may be used in, or in relation to, the manufacture of final products for which such inputs have been brought into factory; ………………………………………………. ………………………………………………" However, Rule 57J of the MODVAT Scheme read as follows : "57-J. Credit of duty in respect of inputs used in an intermediate product. - Notwi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dule to the said Act; (ii) goods classifiable under Heading 36.05 or 37.06 of the Schedule to the said Act; (ii) goods classifiable under Heading 36.05 or 37.06 of the Schedule to the said Act; (iii) goods classifiable under Sub-Heading 2710.11, 2710.12, 2710.13, or 2710.19 (except natural gasoline liquid) of the Schedule to the said Act; (iii) goods classifiable under Sub-Heading 2710.11, 2710.12, 2710.13, or 2710.19 (except natural gasoline liquid) of the Schedule to the said Act; (iii) woven fabrics classifiable under Chapter 52 or Chapter 54 or Chapter 55 of the Schedule to the said Act; (iv) high-speed diesel oil classifiable under Heading 27.10 of the Schedule to the said Act. (iv) high-speed diesel oil classifiable under Heading 27.10 of the Schedule to the said Act. 13. Explosives would fall under column (2) being a tariff item in Chapter 36; the intermediate product, namely, limestone would fall under column (3) being covered by Chapter 25; and the final product, namely, cement would also fall under Chapter 25 and would fall under column (4). The reading of Rule 57J along with the aforesaid notification can leave no man....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounsel for the assessee has lastly submitted that CENVAT scheme was introduced on 1-4-2000, but Rule 57AB was amended on 29-8-2000 and was given retrospective effect from 1-4-2000, and it is this amended Rule which will govern the situation. This plea was not taken by the assessee in reply to the show cause notice, nor was it raised before any of the Excise authorities. A new plea cannot be allowed to be raised for the first time in this Court. However, even if the amended Rule is taken into consideration, the assessee can get no advantage. The amended Rule 57AB reads as under : "(1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of, - (i) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said First Schedule), leviable under the Act; (ii) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985, leviable under the Central Excise Act, 1944 in relation to the goods falling under sub-heading Nos. [2401.90, 2404.40, 2404....