2009 (1) TMI 711 - AT - Central Excise

Summary

Issues involved: Appeal against disallowance of capital goods Modvat credit for M.S. Rounds and Pig Iron used for repair and maintenance of plant and machinery.

Details of the judgment:

1. The Revenue appealed against the order setting aside the disallowance of Modvat credit for M.S. Rounds and Pig Iron used for repair and maintenance. The Department argued that these items are not covered by the definition of capital goods and thus not eligible for Cenvat credit. The Tribunal had previously held that goods used for repair and maintenance are not integral to the manufacturing process and, therefore, not eligible for credit.

2. The Department reiterated that M.S. Rounds and Pig Iron do not qualify as capital goods or inputs under the Cenvat Credit Rules. They argued that these items do not play a role in machinery functioning and cited precedents to support their stance.

3. The respondent contended that M.S. Rounds and Pig Iron used for repair and maintenance should be eligible for Cenvat credit. They referenced a High Court judgment and Tribunal decisions that supported the eligibility of similar items for credit.

4. After considering both arguments, the Tribunal referred to a High Court judgment that upheld the eligibility of certain items used for repair and maintenance as capital goods for Cenvat credit. Based on this precedent, the Tribunal ruled in favor of allowing Cenvat credit for M.S. Rounds and Pig Iron used in plant and machinery repair and maintenance.

5. The Tribunal found no fault in the impugned order and dismissed the Revenue's appeal, affirming the eligibility of M.S. Rounds and Pig Iron for Cenvat credit. The Cross Objection filed by the respondent was also disposed of during the hearing.