2007 (3) TMI 575 - AT - Central Excise

Summary

Issues involved: Admissibility of Cenvat credit on welding electrodes used for repairs and maintenance of capital goods, classification of welding electrodes as capital goods or inputs.

Admissibility of Cenvat credit on welding electrodes:
The appeal challenged the order upholding that Cenvat credit on welding electrodes was not admissible as they were used for repairs and maintenance of capital goods, not in the manufacture of lead and zinc. The adjudicating authority held that welding electrodes did not qualify as "capital goods" under Rule 2(b) of the Cenvat Credit Rules, 2002, as they were consumables, not components or accessories. Relying on precedents, it was concluded that goods used for repairs and maintenance of capital goods were not eligible for Cenvat credit. The Appellate Commissioner also held that welding electrodes were not eligible for credit as capital goods or inputs, based on previous Tribunal decisions.

Classification of welding electrodes as capital goods or inputs:
The appellant initially claimed Cenvat credit on welding electrodes as capital goods, but later argued they should be treated as inputs when used for maintenance and repairs of machinery in the manufacturing process of lead and zinc. A Larger Bench decision in Jaypee Rewa Plant concluded that welding electrodes used for repairs and maintenance of machinery were not eligible inputs for credit as they were not directly related to the manufacturing process of final products. The argument referencing a Supreme Court decision in Vikram Cement regarding explosives and lubricating oil did not support the admissibility of welding electrodes as inputs. The authorities correctly relied on the Jaypee Rewa Plant decision to dismiss the appeal.