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2013 (7) TMI 786 - AT - Central ExciseWelding electrodes used for repair and maintenance of plant and machinery, are eligible for Cenvat Credit or not - Held that - Relying upon the judgment of Hon ble Chhattisgarh High Court in case of Ambuja Cement Eastern Ltd. 2010 (4) TMI 429 - CHHAITISGARH HIGH COURT , it has been held that welding electrodes used for repair and maintenance of plant and machinery eligible for Cenvat Credit - Hon ble Karnataka High Court in case of Alfred Herbert (India) Ltd. reported in 2010 (4) TMI 424 - KARNATAKA HIGH COURT has also held that the goods used for repair & maintenance of plant and machinery are eligible for Cenvat Credit Also, Apex Court in case of Grasim Industries Ltd. reported in 2011 (10) TMI 2 - SUPREME COURT OF INDIA has held that repair & maintenance of machinery is not manufacture and therefore steal scrap, arising in course of the said activity is not excisable, this judgment does not help the Department, as for determining the eligibility for Cenvat Credit of an item used in an activity, what is relevant is as to whether without that activity in which the item, in question, is used, manufacturing operation are commercially feasible, and it is not relevant as to whether that activity by itself amounts manufacturer. In the case of Sree Rayalaseema Hi-Strength Hypo Ltd. reported in 2012 (11) TMI 255 - ANDHRA PRADESH HIGH COURT decided by Hon ble Andhra Pradesh High Court, the point as to whether without regular repair & maintenance of the plant and machinery by using welding electrodes, manufacturing operations, were commercially feasible, had not been considered Decided in favor of Assessee.
Issues:
1. Eligibility of welding electrodes for Cenvat Credit for repair and maintenance of plant and machinery. Analysis: The case involves a dispute regarding the eligibility of welding electrodes for Cenvat Credit during a specific period for repair and maintenance of plant and machinery. The Jurisdictional Assistant Commissioner initially denied the Cenvat Credit, leading to a confirmation of the denial and imposition of penalties on the appellant by the Commissioner (Appeals). The appellant argued that welding electrodes used for repair and maintenance are essential for smooth manufacturing operations, citing judgments from various High Courts supporting their claim. The departmental representative defended the denial of Cenvat Credit by referring to a Tribunal case and judgments from the Apex Court and High Courts, emphasizing that repair and maintenance activities are distinct from manufacturing and, therefore, not eligible for credit. The representative argued that items used for repair and maintenance cannot be considered as used in the manufacture of final products, based on relevant legal precedents. The presiding judge analyzed the submissions from both sides and reviewed the records. It was established that the welding electrodes were indeed used for repair and maintenance of plant and machinery, which are essential activities for manufacturing operations. The judge delved into the definition of "input" under the Cenvat Credit Rules, emphasizing the broad scope of goods used in or in relation to the manufacture of final products. Referring to legal interpretations, the judge concluded that activities like repair and maintenance, though not manufacturing activities themselves, are integral to the manufacturing process, making items used in such activities eligible for Cenvat Credit. Furthermore, the judge highlighted judgments from various High Courts supporting the eligibility of welding electrodes for Cenvat Credit in similar scenarios. The judge distinguished the Apex Court's ruling on scrap arising from repair and maintenance activities, emphasizing the commercial feasibility of manufacturing operations without such activities. Ultimately, the judge held that the impugned order denying Cenvat Credit was not sustainable, setting it aside and allowing the appeal in favor of the appellant.
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