2010 (3) TMI 154 - HC - Central Excise

Cenvat / Modvat Credit - Whether the ramming mass, used for coating the bricks with which furnaces are lined to withstand the high degree of heat in melting iron in the process of manufacture of steel ingots is an admissible input for taking modvat credit under Rule 57A of the Central Excise Rules 1944? Held that the assessee is entitled to avail the modvat credit on the inputs/material used in or in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final product or not. - In this case the material being used for manufacture of refractory bricks which by stretch of imagination termed as machinery - Modvat credit in respect of mortar castable powder refractory ramming mass foundry flux and chemicals is available under Rule 57A of the Central Excise Rules 1944

Summary

Issues:
Whether ramming mass used for coating bricks for furnaces in the process of manufacturing steel ingots is an admissible input for modvat credit under Rule 57A of the Central Excise Rules, 1944?

Analysis:
The judgment deals with the issue of whether ramming mass used in coating bricks for furnaces qualifies as an admissible input for modvat credit under Rule 57A of the Central Excise Rules, 1944. The Customs, Excise & Gold (Control) Appellate Tribunal referred this substantial question of law to the High Court for adjudication. The provisions of Rule 57-A aim to provide incentives to manufacturers to expand their business premises in India. It allows manufacturers to claim modvat credit on finished excisable goods notified by the Central Government and on inputs used directly or indirectly in the manufacture of final products. Section 57B further elaborates on the eligibility of manufacturers to take credit of specified duty paid on inputs used in or in relation to the manufacture of final products.

The judgment references the case of Collector of Central Excise, Bangalore vs. Escorts Mahle Ltd., where the Supreme Court held that materials used in the manufacture of final products qualify for modvat credit as inputs. The High Court also mentions a similar view taken in a previous case involving Collector of C. Ex. Chandigarh vs. Bhushan Alloys & Steels Ltd., where modvat credit was allowed for materials like mortar, castable powder, refractory, ramming mass, foundry flux, and chemicals under Rule 57A of the Central Excise Rules, 1944. The High Court concludes that the manufacturer in the present case is entitled to claim modvat credit for using ramming mass in coating bricks for furnaces, following the precedent set by previous judgments.

In light of the above analysis and legal precedents, the High Court holds that the manufacturer is eligible to avail modvat credit for using ramming mass as an input in the manufacturing process. Consequently, the question posed is answered in favor of the assessee and against the revenue. The judgment provides clarity on the eligibility of certain materials, like ramming mass, for modvat credit under the relevant provisions of the Central Excise Rules, 1944.

This detailed analysis of the judgment highlights the interpretation of the law, relevant legal precedents, and the final decision reached by the High Court regarding the admissibility of ramming mass for modvat credit under Rule 57A.