CCE Vs. HINDUSTAN ZINC LIMITED

JUDGEMENT

(1.) THE issue referred to the Larger Bench is whether modvat credit is admissible on capital goods used in mines.

(2.) WE have heard both sides. We note that in a recent judgment of September 2004 the Apex Court in CCE, Udaipur Vs. J.K. Udaipur Udyog - : 2004 (171) ELT 289 (SC) has held that input credit is admissible only if the inputs are used in the factory of production and that explosives for blasting mines to excavate lime stone used in the manufacture of cement in a plant a few kilometers from mines did not qualify to be inputs on which credit could be taken either under Rule 57AB of the erstwhile Central Excise Rules, 1944 or its amendment. In the light of this judgment we hold that the credit is not admissible on capital goods used in mines situated outside the factory premises. However, we note that throughout the proceedings the assessees have claimed that the mines are underground and, therefore, inside their factory premises. The plea is to be considered by the DB to whom the matter is sent back for decision only on this aspect. The reference is answered accordingly.