2010 (10) TMI 883 - AT - Central Excise

Cenvat credit on Welding Electrodes used for repair and maintenance of their plant and machinery - whether proper permission of the Committee of two Commissioners has been obtained or not? - Held that - The assessee is entitled to availament of cenvat credit on welding electrodes, which are being used in maintenance of plant and machinery as capital goods or inputs. According to section 35(B)(I)(b)(clause ii) there must be two persons or two Commissioners or Chief Commissioners to review the order placed before them and to arrive at a decision whether the appeal is to be filed or not. In this case, although the Commissioner of Central Excise Meerut-I was holding the additional charge of Commissioner of Central Excise Meerut-II but that cannot be termed as a Committee of Commissioners constituted in the provisions of law. Hence the preliminary objection taken by the assessee is a valid objection. Hence the appeals filed by the Revenue are not proper and correct in view of the law as there is not proper permission from the Committee of Commissioners to file the appeals before this Tribunal. In favour of assessee.

Summary

Issues:
Appeal against denial of Cenvat credit on Welding Electrodes for repair and maintenance of plant and machinery; Appeal against allowing Cenvat credit on Angles, HR Coils, Shapes, Sections, etc.

Analysis:
1. The assessee, a sugar manufacturer, availed Cenvat credit on welding electrodes for repair and maintenance of plant and machinery, considering them as capital goods. They also availed credit on Steel plates, HR sheets, Section, etc., used for repair of obsolete machinery.

2. The adjudicating authority confirmed the demand, imposing penalties. The Commissioner (Appeals) allowed credit on certain items but disallowed it on welding electrodes, leading to appeals before the Tribunal by both parties.

3. The assessee's representative cited High Court judgments supporting Cenvat credit on welding electrodes for maintenance. The Revenue argued against it, referring to Supreme Court and Tribunal decisions disallowing such credits.

4. The Tribunal noted conflicting decisions and held that post-2000 amendments in Cenvat Credit Rules changed the applicability of earlier judgments. Following judicial discipline, the Tribunal allowed Cenvat credit on welding electrodes for maintenance as capital goods.

5. Regarding the proper authorization for Revenue's appeals, the Tribunal found the absence of a valid Committee decision comprising two Commissioners, as required by law. Therefore, the appeals by the Revenue were deemed improper and rejected.

6. In conclusion, the Tribunal allowed the assessee's appeals and rejected the Revenue's appeals, based on the entitlement to Cenvat credit on welding electrodes and the lack of proper authorization for the Revenue's appeals.