2014 (11) TMI 304 - AT - Central Excise

Waiver of pre deposit - Eligibility for cenvat credit of various items parts and accessories, components etc. used for maintenance of the captive power plant - Held that - If a process or activity is so integrally connected to the ultimate manufacture of goods so that without that process or activity, manufacture may, even if theoretically possible, be commercially inexpedient, the goods intended for use in such process or activity would be treated as used in the manufacture of goods. The expression used in Rule 2(k) of CCR, 2004 in the definition of input is used in or in relation to the manufacture of final product whether directly or indirectly , whose scope is much wider than the scope of the expression used in the manufacture . Therefore, in our view, any activity without which the manufacture of final product, though theoretically possible, is not commercially feasible, would have to be treated as having nexus with the manufacture of final product and the inputs used in such activity would be eligible for cenvat credit. impugned order is prima facie contrary to the provisions of the law and the appellant have a strong prima facie case in their favour and the requirement of pre-deposit under section 35F in these circumstances would cause undue hardship to the appellant. Therefore, the requirement of predeposit of cenvat credit demand, interest thereon and penalty is waived for hearing of the appeal and recovery thereof is stayed during pendency of appeal - Following decision of assessee s own previous case 2014 (9) TMI 683 - CESTAT CHENNAI - Stay granted.

Summary

Issues:
Denial of cenvat credit on parts and accessories used for repair and maintenance of the captive power plant.

Analysis:
The judgment involved a dispute regarding the denial of cenvat credit on parts and accessories used for the repair and maintenance of a captive power plant in the appellant's factory premises for manufacturing cement. The adjudicating authority had confirmed the demand for cenvat credit, along with interest and penalty, which was upheld by the appellate authority. The applicants, aggrieved by the Commissioner (Appeals) order, filed appeals and stay applications before the Tribunal.

The advocate for the applicants argued that the parts and accessories were indeed used for maintenance and repair of the captive power plant, citing a favorable order by the Commissioner LTU, Chennai in a previous case. Additionally, reference was made to a Tribunal's Stay Order in their own case, where a waiver of predeposit was granted on a similar issue.

On the other hand, the Revenue representative contended that the impugned items did not qualify as parts and accessories under the CENVAT Credit Rules, 2004, as the captive power plant was considered immovable property and non-excisable. Reference was made to a previous case, Vandana Global, where a similar issue led to credit denial. The Revenue also requested that the instant appeals be linked with another appeal for a decision by the Division Bench, as the cited stay order was issued by the Division Bench.

After hearing both sides and examining the records, the Tribunal referred to a previous Stay Order by the Division Bench in a related case. The Tribunal highlighted the interpretation of the expression "in the manufacture of goods" from a Supreme Court case, emphasizing the nexus between activities integral to manufacturing and eligibility for cenvat credit. It was noted that items used for repair and maintenance of plant and machinery should be considered as used in or in relation to the manufacture of the final product.

Based on the precedent set by the Division Bench's decision in the appellant's own case and applying the same reasoning, the Tribunal waived the predeposit of the cenvat credit demand, interest, and penalty, staying the recovery during the appeals' pendency. The stay application was allowed, and the appeals were directed to be linked with another appeal for a regular hearing before the Division Bench.