2015 (1) TMI 589 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - credit on welding electrodes - Repair & Maintenance - Held that - Bench in the case of M/s. Chettinadu Cement Corporation Ltd. Vs Commissioner of Central Excise & Service Tax, LTU, Chennai vide 2014 (9) TMI 683 - CESTAT CHENNAI granted unconditional stay. It has been held that any item used for repair and maintenance of the plant and machinery, would have to be treated as used in or in relation to the manufacture of the final product - Court waives the pre-deposit of duty along with interest and penalty - Stay granted.

Summary

Issues:
1. Denial of Cenvat credit on welding electrodes used for repair and maintenance services instead of in the manufacture of Cement/Clinker.

Analysis:
The judgment involved a dispute regarding the denial of Cenvat credit on welding electrodes by the applicant, engaged in Cement and Clinker manufacturing, amounting to Rs. 30,64,998 during a specific period. The denial was based on the contention that the welding electrodes were utilized for repair and maintenance services, not directly in the manufacturing process of Cement/Clinker. The learned Authorised Representative referred to a decision by the Hon'ble Andhra Pradesh High Court in a similar case to support the denial of credit.

The applicant's Counsel argued that in a previous case before the Bangalore Bench of the Tribunal, which was pending before the Larger Bench of the Supreme Court, a stay was granted. Additionally, citing specific cases where unconditional stays were granted in similar situations, the Counsel contended that items used for maintenance and repair of plant and machinery should be considered as used in or in relation to the manufacture of the final product. This argument was supported by referencing judgments from various High Courts and the Supreme Court.

Upon considering the submissions from both sides and examining the records, the Tribunal referred to a previous case where unconditional stay was granted, emphasizing that items used for maintenance and repair of plant and machinery should be treated as used in the manufacture of the final product. The Tribunal highlighted judgments from different High Courts and the Supreme Court supporting the eligibility of goods used for repair and maintenance for Cenvat credit. It was noted that activities integral to the manufacturing process, even if not directly involved in production, should be considered eligible for credit to ensure smooth manufacturing operations.

Based on the detailed analysis and legal interpretations provided by the Tribunal, it was concluded that the impugned order denying the Cenvat credit was prima facie contrary to the law. Consequently, the requirement of pre-deposit of the demanded amount, interest, and penalty was waived, allowing the applicant to proceed with the appeal without undue hardship. The Tribunal granted the stay application, waiving the pre-deposit of duty, interest, and penalty, considering the strong prima facie case in favor of the appellant and the nexus between repair and maintenance activities and the manufacturing process.