2014 (1) TMI 1796 - AT - Central Excise

CENVAT credit - welding electrodes used for fabrication and repair and maintenance of the machinery, various iron and steel items like shapes and MS flats, HR flats, SS flats and asbestos sheets - Held that - welding electrodes used for repair and maintenance are admissible Cenvatable goods - reliance placed in the case of M/s. Nangganj Sihori Sugar Co. Ltd. Versus Commissioner of Central Excise, Lucknow 2011 (7) TMI 623 - CESTAT, DELHI , where it was held that Cenvat credit can be availed on welding electrodes which are used for maintenance of plant and machinery. As regards asbestos jointing sheets, the Tribunal in the case of Birla Corporation Ltd. 2011 (7) TMI 993 - CESTAT, NEW DELHI has held that said sheets to be admissible cenvatable inputs. The matter needs to be remanded for verification of the use of various iron and steel articles - appeal allowed by way of remand.

Summary

Issues:
Availability of Cenvat credit for welding electrodes used in machinery repair and maintenance; Admissibility of Cenvat credit for iron and steel items; Eligibility of asbestos jointing sheets as cenvatable inputs; Penalty imposition on the appellant.

Issue 1: Availability of Cenvat credit for welding electrodes:
The dispute in the appeal pertains to the availability of Cenvat credit for duty on welding electrodes used for machinery repair and maintenance. The Member (J) referred to various decisions, including those of High Courts and Tribunals, supporting the admissibility of Cenvat credit for welding electrodes used in maintenance. The Tribunal relied on binding judgments stating that duty paid on welding electrodes used for plant and machinery maintenance is eligible for Cenvat credit. The decision set aside the impugned order in favor of the appellant.

Issue 2: Admissibility of iron and steel items for Cenvat credit:
The advocate acknowledged that iron and steel items used for supporting structures were deemed non-admissible as per a Larger Bench decision. However, the items in question were also used for fabricating capital goods, potentially making them admissible inputs. The matter required verification at the original adjudicating authority level, and the decision remanded for further examination in light of applicable laws and actual usage of the items.

Issue 3: Eligibility of asbestos jointing sheets for Cenvat credit:
Regarding asbestos jointing sheets, the Tribunal referred to a previous case where it was held that these sheets are admissible as cenvatable inputs. This decision supported the appellant's position on the admissibility of asbestos jointing sheets for Cenvat credit.

Issue 4: Penalty imposition:
The decision noted that two disputed issues favored the appellant, entitling them to credit, while the issue of iron and steel items as supporting structures was subject to a Larger Bench decision. Given the precedents in favor of the appellant before the Larger Bench declaration, no malicious intent was found to justify penal action. Consequently, the penalties imposed on the appellant were set aside while remanding the matter for a fresh decision on its merits.

In conclusion, the judgment addressed the availability of Cenvat credit for welding electrodes, admissibility of iron and steel items, eligibility of asbestos jointing sheets, and the imposition of penalties, providing detailed analysis and referencing relevant legal precedents to support the decisions made.