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2013 (5) TMI 266 - AT - Central ExciseCenvat credit denied - welding electrodes - Held that - As the same have been used for repair and maintenance of the plant and the issue stands decided in favour of the appellant by judgments of Ambuja Cement Eastern (2010 (4) TMI 429 - CHHAITISGARH HIGH COURT), Hindustan Zinc Ltd. (2008 (7) TMI 55 - HIGH COURT RAJASTHAN) and Alfred Herbert (India) Ltd. (2010 (4) TMI 424 - KARNATAKA HIGH COURT) - denial of cenvat credit not sustainable. In favour of assessee. Sulphur - Held that - The same admittedly is used for whitening of the sugar and hence the same would be covered by the definition of input covering all the items in or in relation to the manufacture of final product whether directly or indirectly or whether contained in final product or not - denial of cenvat credit not sustainable.In favour of assessee. Paints - Held that - As used for protecting the mill machinery from rust. The paints is covered by the definition of input - denial of cenvat credit not sustainable.In favour of assessee. Boiler chemicals - Held that - As used for conditioning the heat water of the boiler which is necessary for smooth functioning of the boiler. Since with smooth functioning of the boiler, manufacturing is not feasible keeping in view the ratio of Singh Alloys & Steel Ltd. vs. Asstt. Collector of Central Excise (1993 (1) TMI 97 - HIGH COURT AT CALCUTTA) cenvat credit in respect of boiler chemical has to be allowed.In favour of assessee. Polythene sheets - Held that - The use of this item is to protect the sugar from moisture & to avoid reprocessing, the sugar bags are covered by polythene bags. Since the use of polythene sheets is after completion of manufacture of sugar, polythene sheets cannot be treated as input & not be eligible for cenvat credit. Against assessee Machinery parts - Held that - Same admittedly are parts of various machinery and hence would be covered by the definition of capital goods - denial of cenvat credit not sustainable.In favour of assessee.
Issues involved:
Denial of cenvat credit on various items such as welding electrodes, paints, sulphur, boiler chemicals, and machinery parts. Analysis: 1. The appellant, a manufacturer of sugar, availed cenvat credit for central excise duty paid on inputs and capital goods. The dispute pertained to the denial of cenvat credit amounting to Rs.11,67,441/- by the jurisdictional Assistant Commissioner. The Joint Commissioner confirmed the demand and imposed a penalty, which was partially allowed by the Commissioner (Appeals). The appellant contested the denial of credit on various items. 2. The appellant's counsel argued that certain items like welding electrodes, paints, sulphur, chemicals, and machinery parts were essential for the manufacturing process and should be eligible for cenvat credit. For instance, welding electrodes were used for repair and maintenance, paints for protecting machinery, sulphur for whitening sugar, chemicals for boiler conditioning, and polythene sheets for protecting sugar bags. 3. The Departmental Representative defended the denial of credit on these items, supporting the Commissioner's findings. 4. The Tribunal considered both parties' submissions and examined the records. 5. Regarding G.C. Sheets and twill bags, used for repair work, the denial of cenvat credit was upheld as they were not eligible for credit. The Commissioner's decision on this issue was upheld. 6. However, the Tribunal ruled in favor of the appellant concerning welding electrodes, citing precedents from various High Courts. The denial of credit on welding electrodes used for repair and maintenance was deemed unsustainable. 7. Similarly, the Tribunal found the denial of credit on sulphur and paints unjustified as they were integral to the manufacturing process. The definition of inputs covered these items, making them eligible for cenvat credit. 8. The Tribunal also allowed credit for boiler chemicals, crucial for the smooth functioning of the boiler as per a precedent from the Calcutta High Court. 9. In contrast, polythene sheets, used to protect sugar from moisture after the manufacturing process, were deemed ineligible for cenvat credit as they were not directly related to the manufacturing of sugar. 10. Finally, the Tribunal upheld the eligibility of machinery parts for cenvat credit as they fell under the definition of capital goods. 11. In conclusion, the Tribunal set aside the denial of cenvat credit on welding electrodes, paints, sulphur, boiler chemicals, and machinery parts. However, the denial of credit on G.C. sheets, twill bags, and polythene sheets was upheld. The penalty on the appellant was also set aside due to the interpretational nature of the dispute.
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