2008 (7) TMI 833 - AT - Central Excise

Cenvat/Modvat - Inputs used for repair and maintenance of machinery - extended period of limitation - Held that - For proper running of the plant and machinery, maintenance is important. From time to time there would be break down and it is very necessary that the repairs are carried out and while carrying out repairs definitely certain inputs are needed and from the definition of input it is very clear that even the items which are used in the maintenance and repair also would be covered by the term inputs as defined in the Cenvat Credit Rule 2(k) - When there is a question of interpretation, the longer period cannot be invoked - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Appeal denying Cenvat credit for inputs used in machinery repair and maintenance.

Analysis:
The appeal challenged the denial of Cenvat credit by the Commissioner for using inputs in machinery repair and maintenance. The Revenue alleged irregular credit claiming repair inputs are not eligible. The Original Authority demanded duty and imposed a penalty. The Commissioner (Appeals) upheld the denial citing case-laws.

The appellant argued that Cenvat credit is permissible for repair inputs, citing various case-laws. They contended a bona fide view and opposed the longer period applicability. The investigation based on audit was deemed time-barred, supported by relevant case-laws.

The issue of interpretation regarding the definition of inputs under Cenvat Credit Rule 2(k) was crucial. The Tribunal noted the broad scope of the term 'inputs,' covering goods used directly or indirectly in manufacturing, even for purposes beyond final product creation. Maintenance activities requiring inputs were considered part of the definition. The Tribunal emphasized that the denial of credit lacked justification, especially when supported by favorable case-law precedents.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The decision highlighted the expansive interpretation of 'inputs' under Cenvat rules, emphasizing the inclusion of goods used in maintenance and repair activities. The Tribunal rejected the invocation of a longer period for demand when there were supportive decisions in favor of the appellant, emphasizing that in cases of interpretation, the longer period cannot be invoked.