S.J. Mukhopadhaya, Acting C.J. - (1.) THIS writ petition has been preferred by the petitioner - The Tata -Iron & Steel Company Limited (M/s. TISCO -hereinafter to be referred as the 'Company') for the following reliefs: a. For declaration that rails and other materials such as sleepers, points and crossings used in the laying of rail tracks in the petitioner's Steel Works at Jamshedpur to be used for moving of raw materials as well as finished products inside the said factory, including to and from the Blast Furnace and the Converter, wherein dutiable iron and steel products (final products) are manufactured, are "inputs" within the meaning of Rule 2(g) of the Cenvat Credit Rules, 2002 and thus eligible to Cenvat Credit in respect of the duties of central excise paid thereon; b. An appropriate writ or a writ in the nature of certiorari for quashing and/or setting aside the communication dated 17 December, 2003 of the 3rd Respondent and the decision of the 2nd Respondent, contained therein, whereunder the 3rd Respondent informed the petitioner -Company about the decision of the 2nd Respondent that the petitioner's claim for availing Cenvat Credit on rails, sleepers, crossings and other connected materials was not sustainable and thus cannot be accepted and, accordingly, rejected; and c. An appropriate writ or a writ of or order in the nature of mandamus commanding and directing the respondents and each of them, their servants and/or agents to forthwith withdraw, revoke, recall and/or cancel the communication dated 17 December, 2003 of the 3rd Respondent and the purported decision of the 2nd Respondent contained therein and communicated thereby and to forbear from giving effect to or acting in terms thereof or pursuant thereto or in furtherance of the said purported decision and/or the said purported communication and to act in accordance with law.
(2.) ACCORDING to the petitioner -Company, it is engaged in manufacturing of iron and steel products in its Steel Works at Jamshedpur and is one of the largest steel producers in the country. It is duly licensed/registered under the relevant Central Excise Rules for the purpose of carrying on manufacturing activity at its factory. Further case of the petitioner is that the Company is in the process of setting up a one million tone per annum expansion project in its factory in order to increase its capacity. For the said purpose, it requires modification of the existing rail tracks inside the factory premises and laying down new tracks for the purpose of movement of raw materials as well as finished products inside the factory, including to and fro from the furnace and converters wherein the manufacturing processes of the final iron and steel products take place. Counsel for the petitioner submitted that under the Cenvat Credit Rules, the company is entitled to avail the Cenvat Credit Benefit in respect of the duties of excise paid on the rails, sleepers, points, crossings and other such materials, which are required for laying down the rail tracks inside the factory since the aforesaid goods are used in or in relation to the manufacture of the final products in its factory, indirectly, and there being no prohibition made as was provided for in the unamended Rule 57A and Rule 57B of the said Rules. According to the petitioner -Company, by way of abundant caution and bona fide and in order to avoid future dispute and litigation, the Company by its letter dated 8 October, 2003, drew the attention of the 2nd Respondent to the aforesaid facts and requested for its decision; as to whether Cenvat Credit can be claimed for such materials. The 3rd Respondent by its letter dated 14/17 October, 2003 informed the petitioner -Company that, prima facie, Cenvat Credit is not available in respect to the aforesaid goods and asked the Company to submit its legal basis in support of such claim. The Company, thereafter, submitted a detailed representation on 1st December, 2003 showing grounds in support of its claim of Cenvat Credit in respect of the aforesaid goods, but it was not accepted and by the impugned letter dated 17 December, 2003, the 2nd respondent rejected the petitioner's claim of Cenvat Credit on rails, sleepers, points, crossings and other such materials. The only question requires determination in this case is: "whether the rails and other materials, such as sleepers, points and crossings, used in the laying of rail tracks inside the petitioner's factory at Jamshedpur for moving the raw materials as well as finished products, are "inputs" within the meaning of Rule 2(g) of the Cenvat Credit Rules, 2002 and the petitioner is thereby entitled for Cenvat Credit with respect to the duties of Central Excise, paid thereon -
(3.) FOR determination of the said issue, it is necessary to keep in mind the background and feature of Modvat Credit Scheme, as replaced by Cenvat Credit Scheme. The Central Government with a view to extend proforma credit to all excisable commodities, with exception of few sectors like petroleum, tobacco and textiles, initially framed a scheme, known as Modified Value Added Tax (MODVAT) Credit Scheme, allowing the manufacturer to obtain instant and complete reimbursement of the excise duty paid on the components and raw materials. The said Scheme was replaced by Central Value Added Tax (CENVAT) Credit Scheme. Old Modvat Rules 57A to 57B were replaced with new Rules. Until 30 June, 2001, Modvat and Cenvat Rules were part of the erstwhile Central Excise Rules, 1944. On 21st June, 2001, a separate Rule, as per Cenvat Credit Scheme, was notified by the Central Government, known as Cenvat Credit Rules, 2001, which was superseded by Cenvat Credit Rules, 2002 with effect from 1st March, 2002.;