2011 (3) TMI 290 - AT - Central Excise

Cenvat credit - The credit availed on Welding electrodes were used for fabrication and manufacture of capital goods which are further used for manufacture of final goods can qualify as input or not for As per the decision of Hon ble Karnataka High Court in the case of CCE, Bangalore-I vs. Alfred Herbert (India) Ltd. , held that welding electrodes used in the repair and maintenance of the plant and machinery are entitled for credit - Thus the respondents are entitled for credit availed by them on welding electrodes which are used by them for fabrication and repair and maintenance of their capital goods - The appeals is allowed in favour of assessee.

Summary

Issues:
- Whether the credit availed on welding electrodes used for fabrication of capital goods is allowable under Cenvat Credit Rules, 2004.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute regarding the eligibility of availed credit on welding electrodes used for the fabrication of capital goods. The Revenue contended that the welding electrodes were consumables and not eligible for credit. The adjudicating authority had confirmed the demand based on a previous Tribunal decision. However, the Commissioner (Appeals) allowed the claim of the respondents, leading to the Revenue's appeal.

The Revenue argued that the welding electrodes were used for maintenance and expansion, citing precedents such as Vandana Global Ltd. and decisions of the Apex Court. They emphasized that credit on capital goods is only available for excisable goods used in the factory for manufacturing inputs. The Revenue also challenged the definition of inputs in a specific case.

On the other hand, the respondents relied on judgments from the Chhattisgarh High Court and Karnataka High Court, which held that welding electrodes used in repair and maintenance of plant and machinery are eligible for credit. They sought to uphold the impugned orders and reject the Revenue's appeals.

After hearing both parties, the judge noted that the issue revolved around whether welding electrodes used for fabricating capital goods qualify as inputs under the Cenvat Credit Rules, 2004. The judge distinguished previous cases cited by the Revenue, stating they were not directly relevant to the current situation. The judge highlighted judgments from the Chhattisgarh High Court and Karnataka High Court, supporting the eligibility of credit for welding electrodes used in maintenance. Additionally, a judicial pronouncement by the highest court was referenced to further support the respondents' position.

Ultimately, the judge upheld the impugned orders, ruling in favor of the respondents. The judge concluded that the respondents were entitled to the credit availed on welding electrodes used for the fabrication and maintenance of their capital goods. The appeals filed by the Revenue were rejected, and the decision was pronounced in open court.