2013 (10) TMI 174 - AT - Central Excise

CENVAT Credit Waiver of Pre-deposit - The issue involved was admissibility of cenvat credit on items like SS Plates/ MS Plates/ HR Plates/ HR Coils/ Aluminium coils/ GI Earthing Strips etc. used in the repair and maintenance of capital goods Held that - Following Hindustan Zinc Limited vs. CCE Jaipur 2013 (3) TMI 427 - CESTAT NEW DELHI - welding electrodes used for repair and maintenance of the plant and machinery are entitled for Cenvat credit - Thus the items used for repair and maintenance of plant and machinery would be eligible for Cenvat credit and the Commissioner (Appeals) s order denying Cenvat credit in respect of the same was not sustainable - a prima facie case was made in the favour of assessee for complete waiver of the confirmed dues and penalties - Accordingly, there will be a stay on recoveries of confirmed dues and penalties till the disposal of the appeal.

Summary

Issues involved: Admissibility of cenvat credit on items used in repair and maintenance of capital goods.

Analysis:

1. The appellant filed a stay application against the order passed by the Commissioner (Appeals) confirming a demand, interest, and penalty. The issue at hand was the admissibility of cenvat credit on items like SS Plates, MS Plates, HR Plates, HR Coils, Aluminium Coils, and GI Earthing Strips used in the repair and maintenance of capital goods.

2. The appellant's representative argued that based on the order in the original case and legal precedents, the items used for repair and maintenance of capital goods should be entitled to cenvat credit. Reference was made to judgments in the cases of Vandana Global vs. CCE, Raipur and Hindustan Zinc Limited vs. CCE Jaipur.

3. On the contrary, the Revenue's representative contended that cenvat credit on items used for repair and maintenance of machines is not admissible, citing case laws such as Shree Rayalaseema Hi-strength Hypo Limited and SAIL vs. CCE, Ranchi, along with a CBEC circular dated 08.07.2010.

4. The Tribunal noted that the materials in question were not used for the support structure or foundation of machinery, which aligns with the Larger Bench judgment. The CBEC circular specified that credit shall not be admissible on inputs used for repair and maintenance of capital goods, creating a peculiar situation where credit is denied for replacing worn-out parts.

5. In a related case, the Delhi Bench of CESTAT held that items used for repair and maintenance of plant and machinery are eligible for cenvat credit, referencing judgments from the Rajasthan High Court and Chhattisgarh High Court. This decision supported the appellant's argument for cenvat credit eligibility.

6. Considering the legal precedents and judgments, the Tribunal found a prima facie case for a complete waiver of the confirmed dues and penalties. Consequently, a stay was granted on the recoveries of confirmed dues and penalties pending the appeal's disposal.