Order

In this group of civil appeals/special leave petition, question of admissibility of credit of the duty paid on “inputs” namely, explosives, lubricating oils and welding electrodes as also the question of admissibility of credit on “capital goods” namely, limestone crusher, mining equipment etc. under Cenvat Credit Rules, 2000, 2001 & 2002 arise for determination.

2. Since common questions of law and fact arise for determination, the above civil appeals are clubbed together. For the sake of convenience, the facts in Civil Appeal No. 1197 of 2005 are mentioned herein below.

3. Three show-cause notices dated 26.8.2000, 10.2.2003 and 29.1.2003 were issued by the department to the assessee proposing to disallow the credit on aforestated items on the ground that they were used for extraction of limestone in the mines and not within the factory in which cement (final product) was manufactured by the assessee. The assessee replied to each of the above three show-cause notices by which it submitted that the substantive definition of “input” as per clause (d) of rule 57AA of Central Excise Rules, 1944; rule 2(f) of the Cenvat Credit Rules, 2001 and rule 2(g) of Cenvat Credit Rules, 2002 was in pari-materia and was not different from the definition of “input” under erstwhile rules 57A and 57B of Central Excise Rules, 1944. According to the assessee, there was no difference between the Modvat scheme and the Cenvat scheme as far as the substantive definition of “input” was concerned. According to the assessee, the Cenvat scheme was more broad-based as compared to the earlier Modvat scheme.

4. The assessees are engaged in the manufacture of cement and clinker falling under chapter 25 of Central Excise Tariff Act, 1985. They use explosives, welding electrodes, lubricating oil and crusher for extraction of limestone and crushing in the mines adjacent to the cement factory of the assessees. Being aggrieved by the order dated October 30, 2003 confirming the demand, the assessees preferred appeals to the Commissioner (Appeals).

5. By order dated 27.2.2004, the Commissioner (Appeals) took the view that the Cenvat credit was admissible only when the inputs or the capital goods were used by the manufacturer within the factory premises and since the above goods were used in the mines adjacent to the factory premises, the assessees were not entitled to the credit on the aforestated goods.

6. Aggrieved by the said order of the commissioner dated 27.2.2004, the assessees filed appeals before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. Following the judgment of the Division Bench of this Court in the case of Commissioner of Central Excise, Jaipur v. J.K. Udaipur Udyog Ltd. reported in 2004(171) ELT 289, the tribunal held that input credit was not available for the reason that the above goods namely explosives, lubricating oil, welding electrodes & crusher were not used within the factory; that the same were used in the mines located outside the factory; and consequently, the appeals preferred by the assessee stood dismissed. Hence, these civil appeals.

7. In the civil appeals preferred by the assessees, a specific ground has been taken to the effect that the judgment of the Division Bench of this Court in J.K. Udaipur Udyog Ltd. (supra) was in conflict with a three-Judge bench decision of this Court in Jaypee Rewa Cement v. Commissioner of Central Excise, M.P. reported in 2001(133) ELT 3. In the judgment of the Division Bench of this Court in J.K. Udaipur Udyog Ltd. (supra), this Court took the view inter alia that the Modvat scheme was different and distinct from the Cenvat scheme whereas according to the assessees, there was no such difference except that Cenvat scheme covered inputs, capital goods and services and, therefore, the said Cenvat scheme was more broad-based. In this connection, it has been urged that even under rule 57J of the Modvat scheme, limestone (intermediate product) sent directly to a job worker attracted credi