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2015 (10) TMI 1370 - AT - Central ExciseEligibility of welding electrodes used for repair and maintenance of the plant and machinery for Cenvat credit - Held that - welding electrodes used for repair and maintenance of plant and machinery are eligible for Cenvat credit - denial of Cenvat credit in respect of welding electrodes used for repair and maintenance of plant and machinery and Cenvat credit demand on this basis is not sustainable. - Decision in the case of Union of India vs. Hindustan Zinc Ltd. reported in 2006 (5) TMI 44 - HIGH COURT RAJASTHAN appeal against it has been dismissed by the Apex court vide judgment reported in 2006 (11) TMI 551 - SUPREME COURT OF INDIA . As regards the capital goods Cenvat credit in respect of CI Slag pot, this issue also stands decided in favour of the appellant by the judgment of the Tribunal in the case of CCE, Delhi - III vs. Jindal Strips Ltd. reported in 2000 (2) TMI 158 - CEGAT, NEW DELHI . In view of this, we hold that the denial of Cenvat credit in respect of this demand and Cenvat credit on this basis is not sustainable. Various depots had transferred the end cuttings of pipes under invoices wherein the proportionate duty paid on the pipes at the time of clearance from their respective factories had been mentioned. The Department seeks to re-calculate this duty on the basis of the scrap value of the end cuttings, as mentioned in the depot invoices and restrict the Cenvat credit to that amount. In our view this stand of the Department is not correct in view of the Apex court s judgment in the case of Commissioner of Central Excise & Customs vs. MDS Switchgear Ltd. reported in 2008 (8) TMI 37 - SUPREME COURT , wherein it has been held that the receiver manufacturer who had received the duty paid inputs from a supplier - manufacturer is entitled to Cenvat credit of the duty paid by the supplier manufacturer and the Central Excise Authorities having jurisdiction for the recipient manufacturer cannot review the assessment of the duty at the end of the supplier manufacturer. - Decided in favour of assessee.
Issues:
1. Eligibility of Cenvat credit on end cuttings of pipes received by Sahibabad unit for re-melting. 2. Eligibility of Cenvat credit on welding electrodes used for repair and maintenance. 3. Eligibility of Cenvat credit on CI Slag pots. Analysis: Issue 1: The appellant company manufactures precision pipes at various units and clears them to depots across India. The dispute revolves around the Cenvat credit demand of &8377; 1,20,48,313/- against the Sahibabad unit for end cuttings of pipes received from depots. The Department argues that the credit should be restricted to the value mentioned in the invoices sent by depots, even though the original duty paid on the pipes varied. The appellant contends that the duty paid by the supplier should be credited to the recipient, citing the precedent set by the Apex Court in Commissioner of Central Excise & Customs vs. MDS Switchgear Ltd. The Tribunal agrees with the appellant, holding the Department's re-calculation of duty based on scrap value as incorrect. The Cenvat credit demand is deemed baseless and unsustainable. Issue 2: The second point of dispute concerns the eligibility of Cenvat credit on welding electrodes used for repair and maintenance at the Sahibabad unit. The Department seeks to deny the credit, arguing that these electrodes are not eligible. However, the appellant cites judgments from various High Courts supporting the eligibility of such credits. The Tribunal concurs with the appellant, relying on the majority view of High Courts that welding electrodes used for plant and machinery maintenance are indeed eligible for Cenvat credit. The denial of credit on this basis is deemed unsustainable. Issue 3: The final point of contention revolves around the eligibility of Cenvat credit on CI Slag pots, a type of equipment used for handling molten metal. The appellant had claimed a Cenvat credit of &8377; 39,140/- for this item, which the Department disputed, arguing that it does not qualify as 'capital goods.' The Tribunal, referencing a previous judgment in a similar case, rules in favor of the appellant, stating that the denial of Cenvat credit for this item is not sustainable. In conclusion, the Tribunal finds the impugned order unsustainable and sets it aside, allowing the appeal in favor of the appellant.
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