Seems it is fine as long as they are buried in consecrated ground.
http://www.catholicculture.org/culture/library/view.cfm?id=645&CFID=111867998&CFTOKEN=89296457
“You can’t store Grandma on the mantel or scatter your father’s ashes across the 13th green of his favorite golf course,” advises Father Peter Polando, canon lawyer and pastor of St. Matthias Parish in Youngstown, Ohio. “The Church has strong feelings about the fact that this body has been a temple of the Holy Spirit and requires a proper burial as a result.”
By definitions supplied from funeral-industry literature, cremation is the process of reducing the body to bone fragments through the application of intense heat. The bone fragments are then pulverized, and placed within a temporary container before being returned to the family.
Catholic burial practice calls for the cremains to be buried in an urn within a consecrated grave or placed inside a mausoleum. Keeping ashes at home or scattering them on land or sea, even where legal, is inappropriate to the Church’s deep reverence for the body as a place where the soul has resided, As “Our Sunday Visitor’s Catholic Encyclopedia” notes:
“Cremation was the normal custom in the ancient civilized world, except in Egypt, Judea and China. It was repugnant to early Christians because of the belief in the resurrection of the body. By the fifth century, cremation had been largely abandoned in the Roman Empire because of Christian influence.”
That’s just crazy. Once the soul has departed, the corpse is nothing but dead meat. It is no longer the Temple of anything.
Of course, the multi-million-dollar Catholic cemetery business would go bust if the Church taught otherwise.
Everything in the Catholic Church comes down to money.
Cremation costs about a thousand bucks.
A traditional Catholic funeral with 3 days of waking, Church ceremony, and burial comes close to $10,000 (for a moderate bash).
The Bible says nothing about consecrated ground either.