Commissioner of Central Excise-I Vs Ambuja Cement Ltd. (Supreme Court)
Summary: The Supreme Court of India, in Commissioner of Central Excise-I, Chandigarh Vs Ambuja Cement Ltd., considered whether MODVAT credit was admissible on parts, components and accessories of Diesel Generating Power Plant (DGPP) sets used in the manufacture of cement. The Revenue challenged the decisions of the High Court and Tribunal allowing the assessee to claim MODVAT credit on these goods. The central question was whether the DGPP sets and their components qualified for credit under Rule 57Q of the Central Excise Rules, considering their connection with the manufacturing activities of the cement factory.
The Supreme Court examined the findings recorded by the High Court on the basis of the evidence and material available on record. The High Court had specifically found that the DGPP sets formed an integral part of the respondent’s factory and were ultimately used in the manufacture of cement. The machinery was therefore connected with the manufacturing process, rather than being treated as equipment unrelated to the production of the final product. These factual findings formed the basis for determining the admissibility of MODVAT credit on the relevant parts, components and accessories.
The Court held that, in view of the established use of the DGPP sets in the cement manufacturing factory, Serial No. 5 of the Table appended to Rule 57Q was applicable. Consequently, Ambuja Cement Ltd. was entitled to MODVAT credit on the parts and components of the DGPP sets. The Supreme Court accepted the High Court’s findings regarding the integration of the power generation equipment with the factory and its use in manufacturing cement. It found no justification for interfering with the decisions allowing the credit. The ruling thus affirmed the eligibility of the disputed goods for MODVAT credit on the facts established in the proceedings.
Accordingly, the Supreme Court dismissed all the Revenue’s appeals, thereby sustaining the MODVAT credit allowed to Ambuja Cement Ltd. The decision covered Civil Appeal Nos. 3005/2011, 3007/2011, 3006/2011, 9295/2012, 6504/2022 and 6505/2022. Leave was granted in the two connected Special Leave Petitions before the appeals were dismissed. The order was pronounced on 8 September 2022 by a Bench comprising Justice M.R. Shah and Justice Krishna Murari. The decision confirms that DGPP components forming part of a cement factory and used in manufacturing its final product qualify for MODVAT credit under the applicable provisions of Rule 57Q.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Leave granted in Special Leave Petition (C) Nos. 28817/2011 and 28811/2011.
We have heard Mr. N. Venkataraman, learned ASG, appearing on behalf of the Revenue and Mr. V. Sridharan, learned Senior Advocate, appearing for the respondents. The short question which is posed for consideration of this Court is whether, in the facts and circumstances of the case, the High Court/Tribunal were justified in allowing Modvat credit on parts, components and accessories of Diesel Generating Power Plant [DGPP] sets to assessee?
On appreciation of evidence and considering the material on record, the High Court has specifically observed and found that DGPP sets on which Modvat credit is allowed is part and parcel of the factory of the respondent which is ultimately used in the manufacture of end product – cement. Therefore, Sl. No.5 of the Table appended to Rule 57Q shall be attracted and therefore the assessee shall be entitled to the Modvat credit on such DGPP sets being parts/components of the cement plant/final manufacture product.
In that view of the matter, no interference of this is called for.
All the Appeals stand dismissed.
Leave granted in Special Leave Petition (C) Nos. 28817/2011 and 28811/2011.
All the Appeals stand dismissed in terms of the signed order. Pending applications stand disposed of.
