2009 (9) TMI 778 - AT - Central Excise

Summary

Issues involved: Disallowance of Cenvat credit on welding electrodes for repair and maintenance, imposition of penalty under Cenvat Credit Rules, conflicting decisions on admissibility of Cenvat credit.

Summary:

The Appellate Tribunal CESTAT NEW DELHI considered a case where the Asstt. Commissioner disallowed the capital goods Cenvat credit for welding electrodes used in machinery repair, leading to a Cenvat credit demand and penalty imposition. The Commissioner (Appeals) upheld the Cenvat credit demand but set aside the penalty due to conflicting decisions on the admissibility of Cenvat credit for welding electrodes. The Deptt. appealed against this order, and the respondent also filed Cross Objection.

The Department argued that penalty should have been imposed as the respondent wrongly took Cenvat credit on welding electrodes, citing Rule 15 of Cenvat Credit Rules. The respondent's counsel contended that the issue revolved around the eligibility of welding electrodes for Cenvat credit as capital goods, referencing judgments supporting their admissibility.

After hearing both sides, the Tribunal noted the dispute centered on the penalty linked to the eligibility of welding electrodes for Cenvat credit. It referenced the judgment of the Hon'ble Rajasthan High Court, which deemed welding electrodes eligible for Cenvat credit as capital goods and inputs. Despite a recent Tribunal decision questioning the eligibility of welding electrodes as inputs, the Tribunal upheld the High Court's judgment on welding electrodes as capital goods. Consequently, the Tribunal dismissed the Revenue's appeal and disposed of the Cross Objection filed by the respondent.

(Order dictated in the open Court)