2013 (5) TMI 708 - AT - Central Excise

Eligibity of Cenvat credit on welding electrodes - Held that - As decided in Ambuja Cements Eastern Ltd., (2010 (4) TMI 429 - CHHAITISGARH HIGH COURT), Hindustan Zinc Ltd. (2008 (7) TMI 55 - HIGH COURT RAJASTHAN), CCE, Bangalore-I vs. Alfred Herbert (India) Ltd. 2010 (4) TMI 424 - KARNATAKA HIGH COURT since without repair and maintenance, manufacturing operations, though theoretically possible, are not commercially feasible, the same has to be treated as an activity having nexus with manufacture and hence any inputs used for repair and maintenance would be eligible for cenvat credit - order denying the cenvat credit is not sustainable. In favour of assessee.

Summary

Issues:
1. Eligibility of cenvat credit for welding electrodes used in maintenance and repair of plant and machinery.

Analysis:

The dispute in this case revolves around the eligibility of cenvat credit for welding electrodes utilized in the maintenance and repair of existing plant and machinery. The Assistant Commissioner initially ruled that such welding electrodes are not eligible for cenvat credit, leading to a demand of Rs.2,40,194/- along with interest and a penalty on the appellant. However, the Commissioner (Appeals) overturned this decision, prompting the Revenue to file an appeal against the Commissioner's order.

During the proceedings, the Revenue argued against the Commissioner's decision by citing various judgments, including the cases of Jaypee Rewa vs. CCE, SAIL vs. CCE, and Sree Rayalseema Hi-Strength Hypo Ltd. vs. CC&CE. The Revenue contended that allowing cenvat credit for welding electrodes used in repair and maintenance of plant and machinery was incorrect, emphasizing that the Tribunal's judgment in the SAIL case had been affirmed by the Apex Court.

On the other hand, the appellant's counsel referenced judgments from different High Courts, such as the cases of Ambuja Cements Eastern Ltd. vs. CCE, Hindustan Zinc Ltd. vs. Union of India, and CCE, Bangalore-I vs. Alfred Herbert (India) Ltd. The appellant argued that inputs used for repair and maintenance of plant and machinery should be considered eligible for cenvat credit based on the commercial expedience of such usage, as highlighted in the case of Singh Alloys & Steel Ltd. vs. Assistant Collector of Central Excise.

After considering the arguments from both sides and reviewing the records, the judge noted conflicting views among various High Courts regarding the eligibility of cenvat credit for welding electrodes used in maintenance and repair activities. The judge highlighted that the commercial feasibility and nexus with manufacturing operations are crucial factors in determining the eligibility of cenvat credit for such inputs. Ultimately, the judge concluded that inputs used for repair and maintenance of plant and machinery are indeed eligible for cenvat credit, dismissing the Revenue's appeal based on the aforementioned reasoning.