TaxTMI 
TaxTMI 
2026 (3) TMI 406
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.... inputs viz. explosives, used by them in the course of their business of production of coal. 2. The Revenue alleged that the appellant has violated the provisions of Rule 3(5) of the CENVAT Credit Rules, 2004 along with Rule 9 of the said Rules as the appellant has removed explosives as such from the factory and supplied the same to service providers, in terms of the contract / agreement / work order for removal of Hard Shale and Carbonaceous Shale. It was thus alleged that the appellant has wrongfully availed input credit on the explosives supplied to the engaged service providers. 3. On the basis of the above allegation, a Show Cause Notice dated 17.11.2016 was issued, to deny the CENVAT Credit availed on explosives which had been r....
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....resentative of the Revenue supported the impugned order. 6. Heard the parties and considered their submissions. 7. We find that the issue before us is as to whether the appellant is required to reverse the CENVAT Credit availed on explosives, which have been used in the mines owned by the appellant, by contractors, for explosion / extraction of coal from the mines, or not. 8. Admittedly, the explosives in question have been used by the appellant in their own mines, through contractors, for the purpose of extraction of coal, in terms of the agreement / contract entered into between the parties. In these circumstances, it cannot be said that the appellant has removed inputs as such. Thus, it is not a case for invocation of Rule 3(5) ....
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....y reversal under rule 3(5) of the Cenvat Credit Rules 2004. Therefore, credit cannot be denied in this case. 5.9 I further find in the show cause notice itself, it had been mentioned that the assessee were purchasing the goods in question and availing cenvat credit on such items and subsequently, supplying them to the service providers. The service providers in turn undertook mine development work at the mines of the assessee from these items; that when supply of the goods to the contractors on chargeable basis was under dispute with the sales tax authorities, the assessee has changed the terms and conditions of the agreement entered with the contractors and instead of adjusting the cost of explosives, detonators so supplied to the....
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....nd instead of following the same, it was completely ignored on the ground that the said order was not accepted by the Department and an appeal was preferred before the High Court, which was dismissed on 02.09.2019 on the ground of low tax effect. Similarly, in the case of M/s.Bhilai Steel Plant (supra), the appeal has been dismissed by the Supreme Court on low tax effect and on the same ground, the appeal in the case of M/s. Steel Authority of India Ltd. (supra) was dismissed by the Chandigarh High Court. Needless to mention that the dismissal of the appeals by the Higher Forum was not on merits but on account of low monetary effect and in that view, the order of the Tribunal in the case of Hindustan Zinc Ltd. (supra) has to be followed as ....