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TMI Blog1998 (4) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules or not. (a) Explosives :- The 'Explosives' viz. Safety Fuses, Detonating Fuses, Denoting Caps, Igniters are used for blasting in the lime stone 'mines' situated one to five kilometres away from the cement factory. The 'Explosives' are used in the 'mines' governed under the Mines Act, in relation to mining of limestone and not in the factory. The Central Excise Act and Rules made thereunder are applicable to the area registered as 'factory' with the Central Excise department. The term 'factory' in terms of Rule 174 of the Central Excise Rules is defined under Section 2(e) of the Central Excise Act which reads as under :- "Factory means any premises, including the precincts thereof where is or in any part of which excisable goods other than the salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on". A careful scrutiny of the definition of 'factory' under the Central Excise Act would indicate that premises which includes the precincts where excisable goods are manufactured or wherein any process connected with the production of these goods is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of this a question of law arises whether the "Grinding Media" (Steel Balls) and "Cylpebs" could be considered as an "input" in relation to manufacture of "cement" or not eligible for Modvat under Rule 57A of the Central Excise Rules. (c) Refractories (Fire Bricks) and Refractory Cement :- (i) Refractories (Fire Bricks) are used as lining in the Kiln. These Refractories (Fire Bricks) are fixed together and laid in the Kiln with the help of Refractory Cement. Kiln is a capital goods which falls in the category of machines, machinery, plant which are excluded from the ambit of the definition of "inputs" as provided under Rule 57A of the Central Excise Rules. The Kiln is not complete until and unless it is lined with Refractory Bricks with the help of Refractory Cement to act as an insulation to preserve the heat within the Kiln and also to protect the shell of the Kiln. Refractories after specified intervals require replacement and the Kiln is relined with fresh Refractory (Fire Bricks) with the help of Refractory Cement. (ii) The facts as aforesaid therefore indicate that Refractories (Fire Bricks) and the Refractory Cement are used for lining the Kiln ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as an "input" in terms of definition of "inputs" as provided under Rule 57A of the Central Excise Rules or not. (e) Ball Bearing :- (i) Ball Bearing by its very nature are component, parts of various machines which are used for either reducing the friction and or to provide for a rotary movement to various motors and similar machines, machinery. They can be input for machines but not input in relation to manufacture of cement. The "Ball Bearing", therefore, fall in the exclusion category of explanation to Rule 57A which defines the meaning and scope of word "inputs". The "Ball Bearing", therefore, fall within the category of "capital goods" and cannot be considered as "input" used in relation to manufacture of "Clinker" or "Cement" in terms of definition of "inputs" provided under Rule 57A of the Central Excise Rules. (ii) Besides, in case of A.C.C. Limited v. Collector of Central Excise [1991 (55) E.L.T. 955], CEGAT has held that Modvat credit on Ball Bearing has already been held as inadmissible under Rule 57A of the Central Excise Rules. (iii) Therefore, a question of law arises whether Ball Bearings which are parts and components of variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as inputs and eligible for the benefit of Modvat under Rule 57-A of the Central Excise Rules or not. (g) Rubber and Articles of Rubber :- (i) Rubber and Articles of Rubber are nothing "Conveyor Belt" made of rubber and classified under Chapter Heading No. 4010.90 of Central Excise Tariff. The Conveyor Belt are used for carrying load from one place to another and is a component, accessory of material handling system. (ii) Thus, these Conveyor Belt are not used in the manufacture of final products, hut arc used in relation to material handling purpose. (iii) The "Conveyor Belt" made of rubber are covered by the exclusions in the explanation of Rule 57A of the Central Excise. It is for this reason that later such material handling equipments/systems (Heading 8428 of Central Excise Tariff) and components, spares and accessories of such material handling system were allowed Modvat as capital goods by amending explanation to Rule 57Q of the Central Excise Rules by Notification No. 71/95 (N.T.), dated 16-3-1995. The Conveyor Belt, therefore are inputs under Rule 57A of the Central Excise Rules for "Clinker" and "Cement". (iv)&em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of rubber to the benefit of credit us inputs requires to he referred. As far as electrodes are concerned learned DR points out that the decision of the Tribunal in the case of Modi Alkalies and Chemicals Ltd. reported in 1994 (74) E.L.T. 966 which has been relied upon in the Tribunal's Final Order is distinguishable because the electrodes in the Modi Alkalies case were graphite electrodes which got consumed in the course of manufacture of final products, while in the present case, the electrodes are welding electrodes which do not take part at all in the process of manufacture of the respondent's final product. We are, therefore, satisfied that a question of law has arisen in respect of this item also and, therefore, refer the issue of eligibility of welding electrodes to credit. We, therefore, refer the following question of law for consideration by the Hon'ble M.P. High Court : "Whether credit as inputs in terms of Rule 57A of the Central Excise Rules, 1944 is admissible on the following items : 1. Explosives 2. Grinding media 3. Cylpebs 4. Refractories (fire bricks) 5. Steel castings 6. Ball bearings 7. Electrodes 8. Refractory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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