GCR No.3 of 2001 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Date of Decision: 18.03.2010 Commissioner of Central Excise, Chandigarh ....Petitioner Versus M/s Jay Pee Rewa Cement ...Respondent CORAM:- HON'BLE MR.JUSTICE ASHUTOSH MOHUNTA. HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR. Present: Mr.Gurpreet Singh, Sr.Standing counsel, for the petitioner. Mr.Surjit Bhadu, Advocate for the respondent. ASHUTOSH MOHUNTA, J. (ORAL) The Customs, Excise & Gold (Control), Appellate Tribunal, vide its order dated 8.3.2001, has referred the following substantial question of law for adjudication by this Court:- “Whether or not, modvat credit is available on explosives used in mining of lime stone, which are covered under the definition of 'factory' in terms of Section 2 (f) of the Central Excise Act, 1944 read with Rule 57A of the Central Excise Rules, 1944?” The provisions of Rule 57-A granting incentive to the manufacturer was inserted in order to expend the business premises in India. The combined reading of this provision would reveal that the manufacturer is entitled to claim the modvat credit on such finished excisable goods as the Central Govt. may notify and the credit of specified duty under this section shall be allowed on the inputs used in the manufacture of final products as well as on inputs used in or in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final product or not. According to section 57B, the manufacturer of final products shall be allowed to take credit of the specified duty paid on the inputs used in or in relation to the manufacture of final products, whether directly or indirectly and whether contained in the final products or not, namely, (i) the inputs, which are manufactured and used within the factory of production, but according to section 57B (2), the GCR No.3 of 2001 2 manufacturer of the final products shall not be allowed to take credit of the duty paid on machines, machinery, equipment, apparatus, tools, appliances or capital goods. It means, the assessee is entitled to avail the modvat credit on the inputs/material used in or in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final product or not. In Collector of Central Excise, Bangalore vs. Escorts Mahle Ltd. (2003) 4 Supreme Court Cases 758, the Hon'ble Supreme Court has held that the material used in the manufacture of final products would be eligible modvat credit being an input. In this case, the material being used for manufacture of inputs in respect of explosives is termed as machinery. In fact, in Escorts Mahle Ltd.'s case (supra), even parts of machinery would be eligible for modvat credit. Similar view was taken by the Apex Court in case M/s Jaypee Rewa Cement v. Commissioner of Central Excise, M.P. AIR 2001 Supreme Court 3935, wherein it was held that the inputs used in the manufacture of intermediate products that is lime stone, which subsequently used in the manufacture of cement was entitled to modvat credit. In view of the above, we hold that the manufacturer would be entitled to claim modvat credit. Resultantly, the question posed is answered in favour of the assessee and against the revenue. (ASHUTOSH MOHUNTA) JUDGE March 18, 2010 (MEHINDER SINGH SULLAR) AS JUDGE