Dated 25th November, 2019

 Subsequent judgment of the Apex Court cannot be used to re-open assessment or disturb past assessment which have been concluded-Department cannot be authorised to re-open the assessment, which stood closed on the basis of the law as it stood at the relevant time.

Credit admissible on cement as filling of the open ore pits with cement was a mandatory pre- requisite to extract ore.1

Facts of the case

The Appellant being engaged in the manufacture of lead and zinc concentrates, zinc cathode and sulfuric acid falling under chapter 26, 79 and 28 of first schedule to Central Excise Tariff Act. During the course of audit department noticed that the appellant had availed Cenvat credit on cement used in mines for filling pits after extraction of ore.

The same is denied by the department to be termed as input for the manufacture of the final product. Thus Cenvat credit has been disallowed.

Contention of the Appellant

The Appellant submitted that they have availed the Cenvat credit on the cement used for filling the open pits of the mines prior initiating the subsequent extraction of ore in the mine. It is further mentioned that the definition of input has been amended in the year 2011. Prior to the amendment the goods as the one in hand were not to be called as input therefore earlier decisions were against the assessee. But post amendment the situation is different. Otherwise also use of cement in filling of pits prior extraction is the statutory mandate being in furtherance of mining Rules. Also there is a Circular dated 29.04.2011, which states that the cement used in the mines for pre-extraction of ore is an input.

Contention of the department

Department has highlighted upon the decision of Hon’ble High Court of Rajasthan in the case of appellant themselves wherein it was held that cement used for construction repair or maintenance of mines is not an eligible input to avail the Cenvat credit.

Judgement of the Hon’ble Tribunal

The moot question for the Appeals is as to whether the cement used by the appellant who were asked to extract ore from the proposed ore block but only after conducting stopping operations of the said ore blocks, can be called as input.

Perusal of record shows that there has been a permission under the Metalliferous Mines Regulations Act, 1961, which stands in favour of the appellant vide which the appellant was permitted to conduct stopping operations of the ore block by making use of impugned cement and the method of extraction shall be by VRM Stoping method post filled by mill failing mixed with cement in the ratio as prescribed therein. The permission specifically recites that extraction of ore from the proposed area shall be commenced only after proper settlement and consolidation of the fill of stopped out ore block, immediately below the proposed ore block. Perusal of these clauses in the permission by the mines department in favour of the appellant makes it abundantly clear that filling of the open ore pits with cement was a mandatory pre-requisite for the appellant to extract ore. As observed in the above mentioned Act, it was a statutory requirement as well in view of the Regulation 107 (3).

Further, Delhi Tribunal relying in the case of Prism Cement Ltd. Vs. CCE & ST, Jabalpur opined that the cement used herein is a good which has relation, though indirectly, with the extraction of ore thus it qualifies as input under Rule 2(k), prevailing during the relevant period.

Further Hon’ble Supreme Court in the case of Cottons Spinning and Weaving Mills Co. Ltd. Vs. Sales Tax Officer has also held that: "The expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. The appellant’s judgment, fall within the expression "in the manufacture of goods." Hon’ble Apex court even went to the extent of holding that: "the use of electrical equipments, like lighting, electrical humidifiers, exhaust fan etc. were also taken to be necessary equipment, to effectively carry on the manufacturing process. This was the observation of the Hon’ble Apex court even at the time of scope of definition of input was very very restricted”.

Based on various decisions and above discussion it was held that without filling of the ore pits the appellant was statutorily, not in position to extract the ore, i.e. the final product thus the use of cement was very much in relation to the manufacture which was extraction of ore in the impugned cases. Therefore, it was held that the appellant is entitled to treat the same as input. The clarification to this effect is rather available in circular dated 29.04.2011.

The decision of Hon’ble Apex Court in appellant own case Hindustan Zinc Ltd. Vs. Union of India6 is also not applicable for the present case because that case was dismissed mainly on the ground that the grounds taken before the Hon’ble Apex Court were not taken before CESTAT hence were not allowed to be taken for the first time in appeal even before of the High Court.

The Authority and Ld. DR has relied upon in the case of Hon’ble Rajasthan High Court is to be not applicable to the present case, it being prior to the amendment in the definition of the inputs.

Based on the above mentioned discussion, the Appeal stand allowed.


2No. 943/04/2011


4(91) ELT 34 = 2002-TIOL-116-SC-CT-LB

5325 ELT A115 (S.C.)

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