2010 (1) TMI 1239 - HC - Income Tax

Summary

Issues involved: Appeal challenging order on CENVAT credit entitlement.

Summary:
The High Court of Karnataka heard an appeal by the Revenue against a decision by the Customs Excise and Service Tax Appellate Tribunal, affirming the Commissioner of Central Excise's order setting aside the Assistant Commissioner's decision denying CENVAT credit of Rs. 3,28,199 to the assessee. The appeal raised questions regarding the eligibility of CENVAT credit on welding electrodes used for equipment repairs in manufacturing. The Revenue argued that welding electrodes are not 'inputs' as defined under the rules, citing various judgments. However, the Tribunal concluded that welding electrodes used for repairs in the manufacturing process qualify as 'inputs'. The Court referenced a Supreme Court judgment stating that goods integral to the production process are considered 'inputs'. It also mentioned a Rajasthan High Court case supporting the eligibility of CENVAT credit for goods used in equipment maintenance. Consequently, the Court ruled in favor of the assessee, allowing CENVAT credit for welding electrodes used in equipment maintenance during manufacturing. The appeal was dismissed.