2011 (6) TMI 627 - AT - Central Excise

Cenvat credit - denial of Cenvat credit to the appellant on the goods which are used as paints Held that - Inclusive part of the definition indicates that goods which are used as paint within the factory of production are eligible for availing Cenvat credit. As already recorded, there is no dispute that paints on which the credit was availed was received in the factory premises and used by the appellant for painting of pipes and machinery, order is not sustainable, appeal is allowed

Summary

Issues:
- Eligibility of Cenvat credit on goods used as paints for repair and maintenance of equipment.

Analysis:
The appeal involved a dispute regarding the denial of Cenvat credit to the appellant for utilizing goods such as paints, red lead chemical, primer, red oxide, and M-seal as inputs for repair and maintenance of machinery. The Revenue authorities contended that the appellant was not eligible for the credit, leading to the issuance of a Show Cause Notice. The adjudicating authority initially dropped the proceedings, but the department appealed to the Ld. Commissioner (Appeals), who overturned the decision and upheld the demand raised in the Show Cause Notice, prompting the appellant's appeal.

The crux of the issue revolved around whether the goods used as paints qualified for Cenvat credit. The appellant's counsel argued that the definition of inputs covered their case, emphasizing that the paints were used for repair and maintenance of equipment. Conversely, the Ld. DR contended that the items in question fell outside the definition of inputs, as they were used for machines and maintenance. Upon careful consideration of both sides' submissions, the Tribunal identified the core issue as the denial of Cenvat credit on goods utilized as paints.

Examining the factual matrix, it was undisputed that the appellant received and used red lead chemical, primer, red oxide, and M-seal in their factory for painting various machines and pipelines. Referring to Rule 2(K) of the Cenvat Credit Rules, which defines inputs, the Tribunal highlighted that goods used as paint within the factory of production were eligible for availing Cenvat credit. Since the paints in question were received in the factory premises and used for painting machinery and pipes, the Tribunal concluded that the impugned order was unsustainable. Consequently, the Tribunal set aside the decision and allowed the appeal.

In conclusion, the judgment clarified the eligibility of Cenvat credit on goods used as paints for repair and maintenance purposes, emphasizing adherence to the defined criteria under the Cenvat Credit Rules.