2014 (2) TMI 722 - AT - Central Excise

Availability of Cenvat credit of duty paid - Credit claimed on capital goods - Whether duty paid on welding electrodes are used in the factory of appellant for repair and maintenance of plant and machinery is eligible for Cenvat credit - Held that - Cenvat credit can be availed on welding electrodes which are used for maintenance of plant and machinery - impugned order is accordingly set aside and appeal allowed with consequential relief - Decided in favour of assessee.

Summary

Issues:
1. Availability of Cenvat credit on duty paid items claimed as capital goods.
2. Dispute over the correct rule for claiming Modvat credit.
3. Denial of credit on Hydraulic Power Hack Saw used for repairs in the workshop.

Analysis:

Issue 1 - Availability of Cenvat credit on duty paid items claimed as capital goods:
The dispute in the appeal revolved around the availability of Cenvat credit on various items claimed as capital goods by the appellant. The Commissioner (Appeals) had denied the credit based on the appellant's claim under Rule 57Q instead of Rule 57A. However, the Tribunal clarified that the declaration filed under Rule 57A could be considered for citing the benefit under Rule 57Q and vice versa. As there was no dispute regarding the availability of credit, the Tribunal set aside the Commissioner's order and allowed the Cenvat credit.

Issue 2 - Dispute over the correct rule for claiming Modvat credit:
Regarding the denial of credit on Hydraulic Power Hack Saw used for repairs in the workshop, the Commissioner (Appeals) had relied on a Tribunal decision stating that credit is not admissible on capital goods used for repair and maintenance. However, the appellant argued that the definition of capital goods had been amended retrospectively, and the use of such goods for repair and maintenance activities was integral to the manufacturing process. The Tribunal referred to various High Court decisions supporting the eligibility of Cenvat credit on capital goods used for maintenance activities, ultimately setting aside the Commissioner's decision and allowing the credit.

Issue 3 - Denial of credit on Hydraulic Power Hack Saw used for repairs in the workshop:
In a separate judgment, the Tribunal referenced a case involving welding electrodes used for maintenance of plant and machinery. The Tribunal emphasized the binding nature of High Court judgments supporting the eligibility of Cenvat credit on such items. Despite a reference to a Supreme Court decision, the Tribunal concluded that the High Court judgments held more binding force, leading to the setting aside of the impugned order and allowing the appeal with consequential relief.

In conclusion, the Tribunal found no merit in the Revenue's stand and set aside the impugned order, allowing the appeal with consequential relief in favor of the appellant.