MADRAS CEMENTS LTD. Vs. CCE

JUDGEMENT

(1.) THE lower authorities have denied Modvat credit of Rs. 1,47,940 to the assessee in respect of "point attack picks" and "cutter picks" (both falling under Heading 82.07 of the CETA Schedule) which were used in their limestone mines during the period August -October'99. The present application seeks waiver of predeposit and stay of recovery in respect of the above amount as well an amount of penalty of Rs. 1000 imposed on the assessee by the lower authorities.

(2.) AFTER examining the records and hearing both sides, I find that this is the second round of litigation on the question whether the assessee is eligible for capital goods credit in respect of the above items for the aforesaid period. In the first round, the Tribunal remanded the dispute to the original authority, with a specific direction to ascertain whether the mines in which the capital goods in question were used constituted a part of the "factory" as defined under Section 2(e) of the Central Excise Act. Pursuant to this remand, the asst. commissioner found that the mines were not part of the factory. Accordingly, the above capital goods were found to have been used outside the cement factory and held ineligible for Modvat credit under Rule 57Q for the aforesaid period. The decision of the original authority has been upheld by the commissioner (appeals). Ld. consultant for the appellants is banking on an observation recorded by the original authority in its order, which is to the effect that the assessee had shown the survey number of the mines in the application/ground plan submitted for the purpose of central excise registration. According to ld. consultant, on the basis of this observation, the mines ought to have been held to be in the precincts of the cement factory. In this connection, ld. consultant has referred to the Tribunal's decisions cited in the memorandum of this appeal. After giving my careful consideration, I am unable to accept the above contention raised by the consultant inasmuch as the mere fact that there is a common survey number for the factory site and certain extent of land contiguous thereto, does not necessarily lead to the conclusion that such contiguous land is comprised in the "precincts" of the factory, as defined under Section 2(e) ibid. This is because "precincts" is an expression further qualified in that definition. There must be some manufacturing activity in the "precincts" also. The "mining activity" cannot be accepted as "manufacturing activity" in view of the Supreme Court's judgment in the case of J.K. Udaipur Udyog Ltd., , nor do the appellants appear to have a case to the contrary. I have heard ld. SDR also, who has reiterated the findings of the lower authorities.

(3.) FOR the reasons noted above, I do not find any prima facie case for the appellants, who should deposit the entire amount of duty for the purpose of Section 35F of the Central Excise Act. They shall deposit this amount within 4 weeks and report compliance on 20th January, 2006.