INDIA CEMENTS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are two appeals filed by M/s The India Cements Ltd., Sankar Nagar, against orders of the Commissioner of Central Excise (Appeals), Madurai. The appeals are also accompanied by application for stay of each order. In Appeal No. 249/2005 dated 28.12.2005, the lower authority has upheld the order of the original authority disallowing Modvat credit on High Explosives/Ammonium Nitrate to the extent of Rs. 2,39,459/ - and imposition of penalty of Rs. 25,000/ -. In Appeal No. 250/2005 dated 28.12.2005, the Commissioner of Central Excise (Appeals), Madurai has upheld the order of the original authority disallowing credit amounting to Rs. 90,898/ - taken in respect of Greases and Lubricants.

(2.) THE facts of the case are that during November, 2003 to July, 2004, the appellant availed credit of duty -paid on High Explosives/Ammonium Nitrate to the extent of Rs. 2,39,449/ - which were used in the mines for blasting of rock to produce lime stone used to manufacture cement. The inputs in the second appeal involve credit of Rs. 90,898/ - availed during the period April, 2003 to March, 2004. These inputs were used in earth moving equipment such as loaders, dumpers and poclaines, which were used in the mines for moving materials. The ld. Consultant submitted that the credit initially taken in respect of both the appeals had been reversed and requested to dispose the appeals in the light of the apex court's decision in the case of Vikram Cement v. CCE, Indore 2006 - TIOL - 14 - SC - CX - LB, which squarely covers the dispute. I also heard the ld. SDR, who has no objection to disposing the appeal itself.

(3.) THE ld. Consultant has submitted that as per the ratio of Jaypee Rewa Cement v. CCE 2001 (133) E.L.T3 (S.C.), inputs prescribed as per the Modvat Rule 57A used in or in relation to the manufacture of the prescribed final products were eligible for Modvat credit even if the inputs were used in the process outside the factory premises. Provisions contained in Rule 57J, enabled the assessee to take credit on inputs used in the production of intermediate products, which were ultimately used in the manufacture of the final product. As lubricants and greases were used for maintenance and smooth operation of the dumpers, loaders etc. they were eligible inputs for Modvat credit. Explosives used for blasting rocks outside the factory in the mines were also eligible for Modvat credit in terms of the above judgment. Even though a doubt was raised in the apex court's judgment in CCE, Jaipur v. J.K. Udaipur Udyog Ltd., to the effect that the above law ceased to be good law in the wake of enactment of CENVAT Credit Rules, 2000, in Vikram Cement v. CCE, Indore 2006 (194) E.L.T.3 (S.C.), the apex court ruled that the ratio laid down in Jaypee Rewa Cement case continued to apply. The apex court ruled that having regard to the fact that the CENVAT Rules in effect substituted the MODVAT Rules, the decision in Jaypee Rewa Cement would continue to apply. In the light of the above observations of the apex court, the inputs involved in both the appeals were eligible for Modvat credit and the orders appealed against deserved to be set aside.