BALIA, J. - (1.) THESE two cases of M/s. Raj Cement raise identical issues and are being heard and decided together.
(2.) TAX Reference Application No. 10/2002 has arisen out of the order passed by the Customs Excise and Gold Control Appellate Tribunal on 25. 7. 2002 before the provision for filing appeal came into force and in respect of the show cause notice dated 17. 6. 1998 issued by Superintendent, the Central Excise, Range Beawar stating that the assessee has erroneously availed the Modvat Credit from January 1998 to April 1998 on the items viz. , Blowbar, Impector, Scrapper chain, Appron feeder with scrapper and conveyor etc. as capital goods under Rule 57q of the Central Excise Rules, 1944. The notice was also issued in respect of capital goods viz. components for belt conveyor, and rubber conveyor belt which were used to carry lime stone from their mines to the factory premises. The Assessing Officer as well as the Commissioner, Central Excise (Appeals) decided against the appellant and passed an order withdrawing the modvat credit availed by the assessee on the aforesaid items. Before the Tribunal while the Revenue relied on the observations made by the Supreme Court in Jaypee Rewa Cement vs. Commissioner of Central Excise, M. P. 2001 (133) ELT 3 (SC), the assessee contended after putting the plan which shows the factory, the mining area and the crusher, including the conveyor belt connecting the crusher within the factory, that the land on which the conveyor belt has been installed is the property of the assessee and is connected to and is part of the factory; that all these items are installed in an area which is adjacent to the factory i. e. , in an area which can be called as precincts of the factory in terms of Section 2 (e) of the Central Excise Act, 1944 and are being used in connection with the manufacture of final product. Thus, they are eligible for modvat credit under Rule 57q. The assessee relied on the decision of the Tribunal in case of C. C. E. Chennai vs. Pepsico India Holdings Ltd. (2001 (42) RLT 800 (CEGAT), wherein PVC pipes used for drawing water from a well situated at a distance of 200 metres away from the factory premises was considered to be falling within the definition of `factory' as given in Section 2 (e) and who held to be admissible for the purpose of modvat credit under Rule 57q. The other decisions of the Tribunal following the Pepsico India Holdings Ltd's. Case were also relied on. However, the Tribunal did not agree with this contention and referred to the following observations made in Jaypee Rewa Cement & case (supra):- " We have gone through the decision of Tribunal. In view of the provisions of Rule 57q, the appellant is not entitled to any relief. The appeal is dismissed. The above order was passed in a connected appeal No. C. A. No. 4263/2001 whereas main judgment had considered and laid down the ratio related to use of inputs in manufacture of intermediate product and the same were held to be eligible for modvat credit under Rule 57a and 57j. In the aforesaid circumstances, an application has been moved under Section 35 H of the Central Excise Act, 1944. In this application, the following questions have been sought to be raised as questions of law arising from the Tribunal's order:- 1. Whether capital goods used in the precincts of the factory area for obtaining crushed limestone and transporting crushed limestone into raw mill which is then used in the plant for the manufacture of cement can be considered as eligible for Modvat credit in terms of Rule 57q of the Central Excise Rules, 1944? 2. Whether in the facts and circumstances of the present case, the precincts of the plant area, where the crusher and conveyor belt are installed, can be called as a factory within the meaning of Sec 2 (e) of the Act? 3. Whether the mining area and the area covered under the crusher and the conveyor belt reaching plant falls within the premises/precincts of the factory as defined in Sec. 2 (e) of the Act? 4. Whether the Tribunal was right in holding that capital goods in question could not be considered as eligible for modvat credit because they were used at a place away from factory? 5. Where the use of capital goods in captive mines for obtaining limestone, an intermediate product, which is then used for manufacturing cement can be considered to be a process in the manufacture of final goods? 6. Whether the process of mining limestone in captive mines undertaken by cement factory can be considered as integral to the process of manufacture of cement, more particularly in view of the fact that mining area lying adjacent to the cement factory area is also nothing but a part of factory area? 7. Whether it can be said that Hon'ble Supreme Court has in Jay Pee Rewa's case disallowed Modvat credit on capital goods used in mines? 8.Whether the Tribunal was right in disallowing modvat credit on the basis of judgment of the apex Court in Jay Pee Rewa's case more particularly when in the present case capital goods in question were used at crusher and conveyor belt and not at all in the mining area? 9. Whether the Tribunal was bound to allow modvat credit in question on the basis of its earlier judgment allowing such credit on capital goods used in mines and/or at place outside the factory area? 10.Whether in the facts and circumstances of the present case, more particularly in view of the fact that the mining area as well as crusher and conveyor belt area also falls within the site plan of the factory area, the Tribunal was right in holding that the said area did not form part of the factory as defined in Sec. 2 (e) of the Act? 11.Whether crushed limestone is excisable commodity and therefore the place where it is manufactured (i. e. crusher lying in mining area) is obviously factory area?"
(3.) THOUGH the questions are found in multifacets but the question of law arising for consideration can be summed up as under:- " Whether the assessee is entitled to avail modvat credit in respect of Duty paid on crushers and conveyors belts and parts thereof installed at mines for the purpose of obtaining intermediate product by crushing the limestone and then transporting it through conveyor belt from mines to the factory connecting the rope ways for being used in the factory?" Subsequent to filing of the reference application No. 10/2002, the petitioner filed Writ Petition No. 5661/2003 against the order of the Tribunal refusing to stay the recovery of the demand confirmed by the order which is subject matter of reference. During the course of earlier proceedings, the writ petition was connected with the Excise Reference No. 10/2002. Having heard learned counsel for the parties we are of the opinion that substantial questions of law do arise for consideration in the application under Section 35h as noticed by us aforesaid as it relates to interpretation of Rule 57q and the eligibility of modvat credit on the crusher and conveyor belts used for the purpose of transporting the crushed lime-stone from the area under the mining lease to the factory side through rope way which connects two sites for the purpose of transporting inputs to the factory for being used there and for manufacture of goods. ;