2011 (10) TMI 329 - AT - Central Excise

Cenvat credit in respect of welding electrodes used for repair and maintenance of plants and machineries Held that - Various judgments of High Courts have held that Cenvat credit can be availed on welding electrodes which are used for maintenance of plant and machinery. See CCE, Bangalore-I vs. Alfred Herbert (India) Ltd (2010 - TMI - 77831 - Karnataka High Court) - Decided against the Revenue.

Summary

Issues involved:
1. Denial of credit in respect of welding electrodes used for repair and maintenance of plants and machineries.
2. Setting aside of penalty imposed upon the respondents.
3. Denial of modvat credit upheld by the Commissioner (Appeals).

The judgment concerns an appeal filed by the Revenue against the setting aside of a penalty imposed on the respondents while confirming the denial of credit for welding electrodes used in plant and machinery repair. The respondents, in turn, filed a cross objection against the denial of modvat credit upheld by the Commissioner (Appeals). The issue of cenvat credit availability for welding electrodes in plant maintenance has been settled in favor of the assessee by various High Court decisions. Reference was made to the decision in Nangganj Sihori Sugar Co.Ltd. vs. CCE, Lucknow, where it was held that duty paid on welding electrodes used for plant and machinery maintenance is eligible for Cenvat credit based on previous High Court judgments. The Tribunal emphasized the binding nature of High Court judgments over Tribunal decisions, setting aside the impugned order in favor of the assessee. The Tribunal allowed the cross objections, leading to the rejection of the Revenue's appeal and the disposal of both the appeal and cross objection accordingly.

The Tribunal found that the issue of cenvat credit eligibility for welding electrodes used in plant and machinery repair had been conclusively settled in favor of the assessee by previous High Court decisions. The Tribunal referenced judgments from High Courts in Chhattisgarh, Rajasthan, and Karnataka, which held that Cenvat credit could be availed for welding electrodes used in maintenance activities. These judgments were deemed binding, leading to the setting aside of the impugned order. The Tribunal highlighted the precedence of High Court judgments over Tribunal decisions and noted that the matter referred to the Larger Bench of the Supreme Court indicated the binding nature of the High Court judgments cited. Consequently, the impugned order was set aside based on the established legal position regarding Cenvat credit eligibility for welding electrodes used in plant and machinery maintenance.

The Tribunal's decision was based on the established legal principle that Cenvat credit can be availed for welding electrodes used in the repair and maintenance of plants and machineries. By referencing previous High Court judgments, the Tribunal concluded that duty paid on welding electrodes for maintenance activities is eligible for Cenvat credit. The Tribunal emphasized the binding nature of High Court decisions over Tribunal rulings and set aside the impugned order in line with the established legal position. As a result, the cross objections filed by the respondents were allowed, leading to the rejection of the Revenue's appeal and the resolution of both the appeal and cross objection in favor of the assessee.