MADRAS CEMENTS LTD. versus COMMISSIONER OF CENTRAL EXCISE

Citation: [2010] 6 S.C.R. 169 · Decided: 06-05-2010 · Supreme Court of India · Bench: ALTAMAS KABIR · Disposal: Dismissed

Judgment (excerpt)

[2010) 6 S.C.R. 169 
MADRAS CEMENTS LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE 
(Civil Appeal No. 2037 of 2006) 
MAY 06, 2010 
[ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.] 
Central Excise Rules, 1944: Rule 57Q - Modvat credit 
A 
B 
on capital goods - Assessee claiming modvat credit under 
Rufe 57Q in respect of components, spares and accessories · C 
- Revenue disallowing credit holding that the items in 
question were not capital goods - Justification of - Held: 
Justified as assessee failed to identify the machinery for which 
items in question were used. 
The dispute in the appeals related to the eligibility of D 
the appellant-assessee for Modvat Credit on certain 
capital goods which were said to be used as 
components, spares and accessories in the mining 
process in the manufacture of the final product for the 
E 
period November and December, 1999. 
Dismissing the appeals, the Court 
HELD: In order to avail of Modvat/Cenvat credit, an 
Assessee has to satisfy the Assessing Authorities that 
F 
the capital goods in the form of component, spares and 
accessories had been utilized during the process of 
manufacture of the finished product. Admittedly, the 
appellant was not able to identify the machinery for which 
the goods in question were used. In the absence of such 
G 
identification, it was not possible for the Assessing 
Authorities to come to a decision as to whether Modvat 
Credit would be given in respect of the goods i.n 
question. [Paras 12, 13] 
169 
H 
170 
SUPREME COURT REPORTS 
[201 OJ 6 S.C.R. 
A 
Jaypee Rewa Cement v. Commissioner of Central 
Excise (2001) 6 SCC 586; Vikram Cement v. Commissioner 
of Central Excise, Indore (2006) 3 SCC 351; Commissioner 
of Central Excise v. J.K. Udaipur Udyog Ltd. (2004) 7 SCC 
344; Vikram Cement v. Commissioner of Central Excise, 
B Indore (2005) 7 SCC 741, referred to. 
Case Law Reference 
(2001) 6 sec 586 
referred to 
Para 8 
c 
(2006) 3 sec 351 
referred to 
Para 8 
(2004) 1 sec 344 
referred to 
Para 8 
(2005) 1 sec 741 
referred to 
Para 9 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal 
D No. 2037 of 2006. 
E 
From the Judgment & Order dated 18.07.2005 of the 
Customs, Excise and Service Tax Appellate Tribunal, South 
Zonal Bench, Chennai in Appeal No. E/108/04/MAS. 
WITH 
C.A. No. 7443 of 2008 
A.K. Ganguli, A.M.P. Latha, Prabha Swami for the 
F Appellant. 
G 
H 
Gaurav Banerjee, ASG, Rajiv Nanda, Balaji Subramanium, 
B. Krishna Prasad, Shreekant N. Terdal for the Respondent. 
The Judgment of the Court was delivered by. 
ALTAMAS KABIR, J. 1. The short point involved in these 
appeals is whether the AppellanUAssessee is eligible for 
Modvat Credit on certain goods for the period comprising 
November and December, 1999. 
MADRAS CEMENTS LTD. v. COMMISSIONER OF 
171 
CENTRAL EXCISE [ALTAMAS KABIR, J.] 
2. The Appellant, Mis Madras Cements Ltd., Alathiyur, 
A 
hereinafter referred to as 'the Assessee' is the holder of Central 
Excise Registration No.1/Cement/97 and is engaged in the 
manufacture of cement and clinker coming within the ambit of 
Chapter 25 of the Central Excise Tariff Act, 1985, hereinafter 
referred to as 'CETA, 1985'. 
B 
3. The Revenue's contention is that for the months of 
November and December, 1999, the Assessee had taken 
Modvat Credit on ineligible capital goods amounting to 
Rs.8,42,843/-. The further contention of the Revenue is that the 
C 
Assessee was not entitled to such credit, inasmuch as. it had 
taken Modvat Credit on items which did not come within the 
purview of capita~ goods under Rule 570 of the Central Excise 
Rules, 1944, although it was claimed by the Assessee that the 
said items comprised components, spares and accessories 
within the meaning of Explanation 1 (d) of Rule 570(1) relating 
D 
to capital goods. Accordingly, on 31st March, 2000, the 
Assessee was issued show cause notice no.11 of 2000 asking 
it to show cause as to why the amount of Modvat Credit of 
Rs.8,42,843/- should not be disallowed and recovered under 
Rule 57U(3) of the Central Excise Rules, 1944, and why interest 
E 
at the rate of 20% per annum should not be demanded under 
Rule 57U thereof, if the Modvat Credit wrongly availed was not 
paid within three months from the date of receipt of the demand 
notice. The Assessee was also asked to show cause as to why 
a penalty should not be imposed under Rule 1730(b)(b) of the 
F 
aforesaid Rules. 
4. Replying to the said show cause notice, the Assessee 
asserted that the inputs used in or in relatio

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