KIRPAL - (1.) C.A. Nos. 5340-5341/2000. The appellants M/s. Jaypee Rewa Cement are manufacturers of cement in their factory at Raipur. Lime stone is an essential raw material for the said manufacture, but in order to extract lime stone explosives are used for mining the same.
(2.) IT is not in dispute that the explosives which are used are items falling under Chapter 36 of the Excise Tariff. On the said explosives, excise duty had been paid, but the lime stone which was extracted, though an excisable item, was exempt from payment of excise duty by reason of an exemption notification. In the manufacture of cement, the appellants claimed modvat credit in view of the provisions of Rule 57A of the Central Excise Rules. The case of the appellants was that the explosives used in the mining operation must be regarded as inputs and in respect of which notification had been issued by the Central Government in the Official Gazette and credit should be allowed in terms of the said Rule. The excise authorities as well as the CEGAT did not accept the contention of the appellants. The Tribunal came to the conclusion that Rule 57F was applicable in this case as explosives had not been brought into the factory and they had been used at a place away from the cement factory. It was of the opinion that by virtue of the said provision, Rule 57A cannot be extended to take in within its ambit any goods used outside the factory for production of the final product. Rule 57A with which we are concerned in this case reads as follows :- "Rule 57A. Applicability- (1) The provisions of this Section shall apply to such finished excisable goods (hereinafter referred to as the "final products"), as the Central Government may, by notification in the Official Gazette, specify in this behalf, for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the "specified duty") paid on the goods used in or in relation to the manufacture of the said final products [whether directly or indirectly and whether contained in the final product or not] (hereinafter referred to as the "inputs") and for utilising the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restrictions that may be specified in the notification : Provided that the Central Government may specify the goods or classes of goods in respect of which the credit of specified duty may be restricted. Explanation :- For the purposes of this rule, "inputs" includes- (a) inputs which are manufactured and used within the factory of production, in or in relation to, the manufacture of final products, (b) paints and packaging materials, (c) inputs used as fuel, (d) inputs used for generation of electricity, used within the factory of production for manufacture of final products or for any other purpose, and (e) accessories of the final product cleared along with such final product, the value of which is included in the assessable value of the final product, but does not include- (i) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products; (ii) packaging materials in respect of which any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging any final products; (iii) packaging materials or containers, the cost of which is not included in the assessable value of the final products under Section 4 of the Act; and (iv) crates and glass bottles used for aerated waters."
(3.) THE other Rules which are relevant are Rule 57C which provides that credit for duty is not to be allowed if final products are exempt and Rule 57D provides for credit of duty not being denied or varied in certain circumstances. Rule 57F, on which reliance is placed by the Tribunal and also by Mr. Kailash Vasudev, learned Senior Counsel appearing for Revenue, reads as follows :- "RULE 57F. Manner of utilisation of the inputs and the credit allowed in respect of duty paid thereon- (1) The inputs in respect of which a credit of duty has been [allowed under Rule 57A]- (i) [may be used in], or in relation to, the manufacture of final products for which such inputs have been brought into the factory; or (ii) shall be removed, after intimating the Assistant Commissioner of Central Excise having jurisdiction over factory and obtaining a dated acknowledgment of the same, from the factory for home consumption or for export under bond : Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise shall be the amount of credit that has been availed in respect of such inputs under Rule 57A. (3) Notwithstanding anything contained in sub-rule (1), a manufacturer may after intimating the [Assistant Commissioner of Central Excise] having jurisdiction over the factory and obtaining dated acknowledgment 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) for the purposes of test, repairs, refining, re-conditioning or carrying out any other operation necessary for the manufacture of the final products and return the same to his factory, for- (i) further use in the manufacture of the final product; or (ii) removing the same without payment of duty under bond for export; or (iii) removing the same after payment of duty for home consumption : Provided that the waste, if any, arising in the course of such operation is also returned to the said factory; (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; or (ii) removing the same without payment of duty under bond for export; or (iii) removing the same after payment of duty for home consumption : (contd. on Col. 2) 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." The other Rule which is relevant is Rule 57J which reads as follows :- "RULE 57J. Credit of duty in respect of inputs used in an intermediate product - Notwithstanding anything contained in these rules, the Central Government may, by notification in the Official Gazette, specify the inputs used in the manufacture of intermediate products received by a manufacturer for use in or in relation to the manufacture of final products, in respect of which the specified duty paid on the said inputs shall subject to the conditions and restrictions that may be specified in the notification, be allowed as credit under Rule 57A." ;