2014 (4) TMI 144 - AT - Central Excise

Denial of CENVAT credit - Original authority denied the credit holding that welding electrode used for repair and maintenance of machinery is not an eligible input to avail credit - Held that - appellant availed credit of duty paid on welding electrodes used for maintenance of their machinery. The Commissioner (Appeals) observed that they have not stated the usage of the goods. It is also observed that the original authority rightly denied the credit on welding electrodes used for repairs and maintenance of machinery. The learned consultant submits that they have stated the use of the goods in their reply to the show cause notice. In view of that, I find it is appropriate and proper in the interest of justice that the matter should be remanded to the Commissioner (appeals) to examine the usage of the goods. Accordingly, the impugned order passed by the Commissioner (Appeals) is set aside and the matter is remanded back to the Commissioner (Appeals) to decide the matter afresh in accordance with law - Decided in favour of assessee.

Summary

Issues: Denial of CENVAT credit on welding electrodes and penalty

Analysis:
The appellant filed an appeal against the denial of CENVAT credit on welding electrodes and penalty. The original authority had rejected the credit, stating that welding electrodes used for machinery repair and maintenance were not eligible inputs for credit. The consultant argued before the Commissioner (Appeals) that the goods were eligible for credit and could also be considered capital goods under the CENVAT Credit Rules, 2004. However, the Commissioner (Appeals) did not address whether welding electrodes could be classified as inputs.

The authorized representative contended that the Commissioner (Appeals) had already determined, based on case laws and circulars, that welding electrodes were neither cenvatable inputs nor capital goods. Upon reviewing the impugned order, the judge noted that the appellant had claimed credit for duty paid on welding electrodes used for machinery maintenance but had not clearly stated the specific usage of the goods. The original authority's decision to deny credit for welding electrodes used in repairs and maintenance was upheld.

The consultant argued that they had indeed mentioned the usage of the goods in their response to the show cause notice. Consequently, the judge deemed it necessary in the interest of justice to remand the matter back to the Commissioner (Appeals) for a fresh examination of the goods' usage. Therefore, the impugned order was set aside, and the Commissioner (Appeals) was instructed to reconsider the issue in accordance with the law.