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2010 (8) TMI 900 - AT - Central ExciseCENVAT credit - various inputs/capital goods - Held that - CENVAT credit is allowed on welding electrodes, CAF Jointing Sheets, Asbestos packing, Steam Jointing, Jointing Sheets, D.E. White Metal, Metalic Graphite, Style Packing etc. and White Lead and Winding Wires. The orders of authorities below to the extent of denying credit on these items are set aside - Disallowance of credit on other items are upheld - penalty not warranted - The original authority shall rework the demand accordingly - appeal disposed off.
Issues Involved:
1. Eligibility of Cenvat Credit on Welding Electrodes. 2. Eligibility of Cenvat Credit on M.S. Plates, Shapes and Sections, H.R. Plates, Steel Sheets, etc. 3. Eligibility of Cenvat Credit on CAF Jointing Sheets, Asbestos Packing, Steam Jointing, Jointing Sheets, D.E. White Metal, Metallic Graphite, Style Packing, and White Lead. 4. Eligibility of Cenvat Credit on Winding Wire, Coils, Copper Wire, Aluminium Wire, Copper Sheet, etc. 5. Eligibility of Cenvat Credit on Components of P.D. Pumps. 6. Imposition of Penalty. Detailed Analysis: 1. Eligibility of Cenvat Credit on Welding Electrodes: The appellants used welding electrodes for fabricating tubes, pipes, and various equipment or for their repair. The Chhattisgarh High Court in Ambuja Cements Eastern Ltd. held that welding electrodes used in the repair and maintenance of plant and machinery qualify as inputs under Rule 2(g) of the Cenvat Credit Rules, 2002. Consequently, the appeal relating to welding electrodes was allowed, granting the appellants Cenvat credit for these items. 2. Eligibility of Cenvat Credit on M.S. Plates, Shapes and Sections, H.R. Plates, Steel Sheets, etc.: The Larger Bench of the Tribunal in Vandana Global Ltd. ruled that goods like angles, joists, beams, channels, bars, and flats used for laying foundations and building supporting structures cannot be treated as inputs for capital goods or in relation to final products. The appellants used these items for fabricating structures to provide shade to machinery and for making platforms, which cannot be considered accessories to machines. Hence, the appellants were not eligible for Cenvat credit on these items. 3. Eligibility of Cenvat Credit on CAF Jointing Sheets, Asbestos Packing, Steam Jointing, Jointing Sheets, D.E. White Metal, Metallic Graphite, Style Packing, and White Lead: These items were used for sealing joints, preventing leakage, and providing insulation. In the appellants' own case, similar items were previously allowed credit by the Tribunal. Since there was no evidence of this order being overturned, the appellants were deemed eligible for Cenvat credit on these items. 4. Eligibility of Cenvat Credit on Winding Wire, Coils, Copper Wire, Aluminium Wire, Copper Sheet, etc.: The Tribunal previously allowed credit for copper wires but not for other items like coils, aluminium wire, copper sheets, break liners, and red lead. The appellants failed to substantiate their claim that these other materials performed similar functions. Therefore, credit was allowed only for winding wires. 5. Eligibility of Cenvat Credit on Components of P.D. Pumps: During the relevant period, P.D. Pumps were excluded from the definition of capital goods. Consequently, their components could not be treated as capital goods, and the appellants were not eligible for Cenvat credit on these items. 6. Imposition of Penalty: Given the dispute arose from the interpretation of legal provisions of the Cenvat Credit Rules, no mens rea could be attributed to the appellants. Therefore, the imposition of penalties was deemed unwarranted and set aside. Conclusion: The appeals were disposed of as follows: - Cenvat credit was allowed on welding electrodes, CAF Jointing Sheets, Asbestos Packing, Steam Jointing, Jointing Sheets, D.E. White Metal, Metallic Graphite, Style Packing, White Lead, and Winding Wires. - Disallowance of credit on other items was upheld. - The original authority was directed to rework the demand accordingly. - No penalties were imposed on the appellants. Pronounced in the open Court on 24-8-2010.
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