2014 (3) TMI 156 - AT - Central Excise

Cenvat Credit - whether the welding electrodes used in the repair and maintenance of plant and machinery are eligible capital goods for the purpose of Cenvat credit or not. - Held that - in the case of Triveni Engg. & Ind. Ltd. vs. CCE, Meerut I 2013 (6) TMI 615 - CESTAT NEW DELHI and after noting the various decisions, it was held that dismissal of SLP by the Hon ble Supreme Court against the order of the Tribunal in the case of SAIL without going into the reasons does not lay down any law. We further note that the identical dispute was decided in a recent decision of the Tribunal in the case of The Kanoria Sugar and General Manufacturing Company Ltd. 2013 (7) TMI 787 - CESTAT NEW DELHI wherein all the rival decisions have been taken note and it stands observed that the goods used for repair & maintenance of plant and machinery are eligible for Cenvat Credit - Decided in favor of assessee.

Summary

Issues Involved:
Whether welding electrodes used in the repair and maintenance of plant and machinery are eligible capital goods for Cenvat credit.

Analysis:
The main issue in the present appeals was to determine the eligibility of welding electrodes used in the repair and maintenance of plant and machinery for Cenvat credit. The appellants cited various decisions in support of their claim, including cases like Hindustan Zinc Ltd. vs. Union of India and CCE, Bangalore vs. Alfred Herbert (India) Ltd. On the other hand, the Revenue referred to the decision in the case of SAIL vs. CCE, Ranchi, and the judgment of the Honorable Andhra Pradesh High Court in Sree Rayalaseema Hi-Strength Hypo Ltd. vs. Commissioner of Customs & Central Excise, Tirupati. The Tribunal considered all these decisions and noted that the dismissal of SLP by the Supreme Court in the SAIL case did not establish any legal precedent.

In the judgment, it was highlighted that welding electrodes used for repair and maintenance of plant and machinery are essential for the regular operations of a Sugar Mills. The definition of 'input' under the Cenvat Credit Rules was discussed, emphasizing the broader scope of the expression 'used in or in relation to manufacture of final products whether directly or indirectly.' The Tribunal referred to a Supreme Court judgment in J.K. Cotton Spinning & Weaving Mills Co. Ltd. Vs. Sales Tax Officer, Kanapur, to support the interpretation of this expression.

Furthermore, the judgment cited the decision of the Honorable Calcutta High Court in Singh Alloys & Steel Ltd. Vs. Assistant Collector of Central Excise, which emphasized that the definition of 'input' is not dependent on what is commercially expedient to use. The judgment also referred to the ruling of the Honorable Chhattisgarh High Court in Ambuja Cement Eastern Ltd., which held that welding electrodes used for repair and maintenance are eligible for Cenvat credit.

The judgment concluded by stating that since multiple high courts have held that welding electrodes used for repair and maintenance of plant and machinery are eligible for Cenvat credit, those judgments would prevail. Therefore, the appeal was allowed, and the impugned order was set aside, providing consequential relief to the appellant.

In summary, the judgment clarified the eligibility of welding electrodes for Cenvat credit when used in the repair and maintenance of plant and machinery, emphasizing the essential nature of such activities for manufacturing operations and citing relevant legal precedents to support the decision.