2013 (11) TMI 944 - AT - Central Excise

Eligibility for cenvat credit on spare parts - Whether the spare parts of the Ventra Locomotive are eligible for cenvat credit the assessee contended that the spare parts of the Ventra locomotives have to be treated as input and would be eligible for cenvat credit - Held that - Ventra locomotives fall under Chapter 86 of the Tariff and hence the same are not covered by definition of capital goods - spare parts of ventra locomotive cannot be considered as components of capital goods and would not be covered by definition of capital goods - Following Aditya Cement Vs. Union of India 2007 (3) TMI 190 - HIGH COURT RAJASTHAN - As such, the component parts of the Ventra locomotives would have to be treated as inputs eligible for cenvat credit - Thus the order upholding the denial of cenvat credit in respect of the components of ventra locomotives is not sustainable set aside Decided in favour of Assessee. Eligibility for cenvat credit Goods Input or not - Denial of cenvat credit on cement and DA gas Inputs to be used within the factory premises Rule 2(g) of the cenvat credit rules, 2004 - Held that - Following Union of India Vs. Hindustan Zinc Ltd. 2007 (8) TMI 340 - HIGH COURT OF RAJASTHAN - The order denying the cenvat credit on DA gas is not sustainable and the same has to be set aside - DA gas was used for repair & maintenance of plant & machinery but the order for denial of cenvat credit on cement upheld - the cement used in the mines is not eligible as inputs for the purpose of availment of Cenvat credit Decided partly in favour of assessee.

Summary

Issues:
1. Eligibility of cenvat credit for D.A. gas and cement used for repair and maintenance.
2. Eligibility of cenvat credit for spare parts of Ventra Locomotive.

Analysis:

Issue 1: Eligibility of cenvat credit for D.A. gas and cement used for repair and maintenance:
The appellants, manufacturers of zinc and non-ferrow alloys, appealed against denial of cenvat credit for D.A. gas used in machinery repair and maintenance, and cement used for fixing rock bolts in mines. The Asstt. Commissioner confirmed the denial, which was upheld by the Commissioner (Appeals). The appellant argued that both items qualify as inputs for final product manufacture, citing judgments supporting this claim. The Joint CDR defended the denial, referring to previous judgments. The Tribunal considered the submissions and records. Regarding cement, it was held that its use did not qualify for cenvat credit based on a previous judgment. However, for D.A. gas used in repair and maintenance, the Tribunal ruled in favor of the appellant, citing judgments supporting eligibility. The impugned order denying cenvat credit for D.A. gas was set aside, partially allowing the appeal.

Issue 2: Eligibility of cenvat credit for spare parts of Ventra Locomotive:
The dispute centered on whether spare parts of Ventra Locomotive qualify for cenvat credit as inputs. The Tribunal noted that Ventra locomotives do not fall under the definition of capital goods. The appellant argued that the spare parts should be considered as inputs based on previous judgments. The Tribunal referred to a relevant judgment and ruled that the spare parts of Ventra locomotives should be treated as inputs eligible for cenvat credit, in line with previous decisions in similar cases. The impugned order denying cenvat credit for the spare parts of Ventra Locomotive was set aside, allowing the appeal.

In conclusion, the Tribunal allowed the appeal related to spare parts of Ventra Locomotive and partially allowed the appeal concerning the eligibility of cenvat credit for D.A. gas and cement used for repair and maintenance, based on detailed analysis and relevant legal precedents.