TMI Blog2000 (6) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of Commercial Taxes 1965 (16) STC (SC) relied on.] (ii). Indian Rayon Industries Ltd. v. Collector of Central Excise reported in 1995 (76) E.L.T. 358 (T). (Tribunal - Single Member Bench). [Held: Explosives eligible inputs: Tribunal's decision in the case of Associated Cement Co. Ltd. (supra) followed] (iii). Collector of Central Excise, Indore v. New Vikram Cements reported in 1997 (95) E.L.T. 98 (T). (Tribunal - 2-Member Bench). ' [Held: Explosives eligible inputs: Tribunal's decisions in the cases of Associated Cement Co. Ltd. (supra) and Indian Rayon Industries Ltd. (supra) followed.] (iv). CCE, Raipur v. Maihar Cement reported in 1997 (21) RLT 564 (CEGAT). (Tribunal - 2-Member Bench). [Held: Explosives eligible inputs: Tribunal's decisions in the cases of Associated Cement Co. Ltd. (supra) and Indian Rayon Industries Ltd. (supra) followed.] (v). Jaypee Rewa Cement v. CCE, Raipur [Final Order Nos. A/163-66/99-NB (DB) dated 16-3-1999]. (Tribunal - 2-Member Bench). [Held: Explosives eligible inputs: Tribunal's decisions in the cases of Indian Rayon Industries Ltd. (supra) and New Vikram Cements (supra) followed.] (vi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wering two questions viz. (i) whether the explosives used by the appellants for mining limestone, which was intended to be used as raw material in the manufacture of cement in their off-site factory, could be held to be 'inputs' within the meaning of this term under Rule 57A of the Central Excise Rules, and (ii) whether, in the event of the said question being answered in the affirmative, Modvat credit on inputs under Rule 57A could be denied in respect of the explosives on the ground that the mines where they were used were not any part of the factory of production of final product (cement). Ld. Advocate has contended that the first question requires to be answered in the affirmative by applying the ratio of the following decisions: 1. Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, 1965 (65) STC 259 (SC). 2. J.K. Cotton Spg. Wvg. Mills Co. Ltd. v. STO, 1997 (91) E.L.T. (34) (S.C.) = AIR 1965 SC 1310. 3. CCE v. Ballarpur Industries Ltd., 1989 (43) E.L.T. 804 (SC). 4. Singh Alloys Steels Ltd. v. CCE, 1993 (66) E.L.T. 594 (Cal.). 5. Ashwin Vanaspati Industries Pvt. Ltd. v. CCE, 1994 (70) E.L.T. 754 (Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Ashwin Vanaspati (supra). 6.2Ld. DR has countered the above arguments by submitting that Rule 57F(3) was not applicable to the appellants' case; that the explosives were never brought into the factory, let alone removed to the mines from the factory, as required under the rule; and that the appellants had never followed the procedure prescribed under the rule for the purpose of availing any benefit thereunder. Ld. DR has then stated his own case on the basis of the provisions of Rule 57F(1) and Rule 57G(2). He has contended that the explosives did not qualify to be 'inputs' for the Modvat credit under Rule 57A inasmuch as they were never brought into, or received in, the factory of production of final product (cement) as required under the said provisions. He has drawn support to this contention from the Tribunal's decision cited at Sl.No. (vi) in Para (1) of this order. 7.Ld. Advocate has not denied that the explosives were not brought into the factory or removed therefrom to the mines, nor has he contested the DR's submission that the procedure of Rule 57F(3) was not followed. However, he would still adhere to Rule 57F(3) by contending that any procedural lapse under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in the factory for further use in the manufacture of the final products. The relevant provision reads as:Under: Notwithstanding anything contained in sub-rule (1), a(3) manufacturer may after intimating the Assistant Collector of Central Excise having jurisdiction over the factory and obtaining dated acknowledgement of the same, remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products, to a place outside the factory,- (a) ............... (b) for the purposes of manufacture of intermediate products necessary for the manufacture of the final products and return the said intermediate products to his factory, for, - (i) further use in the manufacture of the final product; (ii) .. (iii) . Provided that the waste, if any, arising in the course of such operation is also returned to the said factory: Provided further that the said waste need not be returned to the said factory after the appropriate duty of excise leviable thereon has been paid. 10.2.The ingredients of the above provision are noteworthy, which are as follows: - There should be a removal of input by the manufacturer(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory. It also speaks of return to the factory, of the waste, if any, arising out of the above processing. It is abundantly clear from the expression "return to the factory" used in Clause (b) ibid that the input should be contained substantially, if not wholly, in the intermediate product received in the factory from the place where such product has been manufactured. In the appellants' case, the explosives were used at the mines to blast the limestone rock embedded in the earth's crust. They exploded, getting reduced to their debris or otherwise destroyed in the process. The dynamics of the explosion caused the blowing up of the rock. Indisputably, there occurred no processing of the explosives into limestone, and therefore the limestone received in the appellants' cement factory did not contain any trace of the explosives in any form whatsoever. It must follow that the limestone brought into the factory did not qualify to be "intermediate product" for purposes of Clause (b) ibid. 10.4.Ld. Advocate has contended that limestone is an excisable item classified under Chapter sub-Heading 25.05 of the Central Excise Tariff and therefore its recovery from earth by mining activity w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y absent in Chapter Note (2) of Chapter 25 of the Tariff. It, therefore, follows that the limestone resulting from the blasting activity in the appellants' mines cannot be an excisable item covered by Chapter Heading 25.05 as claimed by ld. Advocate. In Ashwin Vanaspati Inds. (supra), it was a distinct excisable commodity that was held to be "intermediate product" as having been "manufactured". The decision in the said case is, therefore, of no support to the appellants' argument that limestone was "manufactured" as an "intermediate product" to be used in the manufacture of cement. 10.5.Ld. Advocate's reliance on the Delhi High Court's judgment in Hyderabad Asbestos Cement Products (supra) in support of his contention that the process of recovery of limestone at the mines amounted to "manufacture" under Section 2(f) of the Central Excises Salt Act is also of no avail since the High Court's decision stands reversed by the Supreme Court as rightly pointed out by ld. JDR. In the above case, High Court had held that the conversion of asbestos rock into asbestos fibre amounted to "manufacture" under Section 2(f) ibid on account of the fibre being a saleable item known to the market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the explosives and limestone of the appellants nor their mining activity in question attracted the provisions of Rule 57F(3)(b) as rightly contended by ld. JDR. Consequently, ld Advocate's arguments touching procedural aspects of the said provisions and his reliance, in this connection, on Tribunal's decisions in cases like India Paper Pulp (supra) must fall through. If we may now fall back on Rule 57F (1) (i), we have already found that the appellants did not fulfil the requirement of this provision either. 12.As regards Rule 57G, which has also been forcefully relied on by ld. DR, this rule provides the procedure to be followed by a manufacturer of final product for taking credit of duty under Rule 57A on the inputs used by him in or in relation to the manufacture of the final product. The first proviso to sub-rule (2) stipulates that no credit shall be taken unless the inputs are received in the factory under cover of appropriate document evidencing payment of duty on such inputs. 13.More than Rule 57G (2), the provisions of Rule 57F(1)(i) read with Rule 57A appear to hold the key to resolution of the issue before us. According to the definition of the term "inputs" inbuil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ends. The manufacture of the cement can be taken to start only at the stage where the raw materials which are brought in within the factory or taken in for processing are stored and thereafter rendered usable for the manufacture of the cement. That would mean, the process will start from the end at the stage where the limestone has entered the cement factory and is taken up for crushing for desired use in the cement mill. In our view, therefore, the process of mining carried out could not be taken be encompassed or for the manufacture of cement." We are fully in agreement with the view taken by the Bench in Madras Cement Ltd. (supra). In this context, we also note that the above view has been approve by a 5-Member Larger Bench of this Tribunal in the case of Vikas Industrial Gas v. CCE, Allahabad, 2000 (118) E.L.T. 257 (T-LB). 15.In Vikas Industrial Gas (supra), the appellants were manufacturing industrial gases in their factory located at Vikas Nagar, Renukoot. The water required for the manufacturing activity was brought by pipeline from a dam reservoir situated 1 Km away from the factory. The question before the Larger Bench was whether Modvat credit under Rule 57Q was admis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957. The court answered the question in the affirmative after holding that the mining and manufacturing activities of the appellants were an integrated process. Ld. Advocate has heavily relied on this decision to buttress his argument that the mining and manufacturing operations of the present appellants constituted an "integrated process" and therefore the explosives should be held to have been used in the manufacture of cement. In J.K. Cotton (supra), the Apex Court, again, considered the above expression "goods intended ....... goods for sale" and took a view as under: The expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression "in the manufacture of goods." "The expression "in the manufacture" takes in, within its compass all processes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case. Ld. Advocate's reliance on Indian Copper Corporation (supra) and J.K. Cotton (supra) has not advanced the appellants' case. 17.We have followed the principle of law laid down in Rewa Coal Fields (supra) by deciding the issue before us in the light of the clear meaning of the relevant, terms and expressions used in the Central Excise Act and Rules thereunder, without having regard to anything contained in any other statute. We have carefully considered the definitions of "manufacture" and "factory" under Section 2 of the Act and the meaning of the expression "goods used in relation to the manufacture of the final product" under Rule 57A. This rule is one of the rules (57A to 57J) contained in Section 'AA' of the Central Excise Rules. The availment of Modvat credit of duty paid on such goods (inputs) under Rule 57A has to be subject to other provisions of the said Section 'AA' (vide text of Rule 57A). One of such "other provisions" is Rule 57F and, as we have already found. Clause (i) of sub-rule (1) of this rule requires that the inputs should be brought into the factory for being used "in or in relation to the manufacture of the final product". We state these provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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