2015 (2) TMI 1326 - HC - Central Excise

CENVAT Credit - inputs/capital goods - Welding Electrodes (falling under Chapter Heading No. 8311.00) used in the repair and maintenance of plant and machinery - HELD THAT - The issue raised in this appeal is squarely covered by judgment M/S DSM SUGAR ASMOLI VERSUS THE COMMISSIONER OF CENTRAL EXCISE, MEERUT 2015 (2) TMI 1178 - ALLAHABAD HIGH COURT where it was held that Since there is change in provisions, therefore, for the subsequent period, having examined the terms capital goods and input in the subsequent Rules and comparing with the Rules 57A, 57B and 57Q of earlier Rule, for the purpose of present case, we do not find any substantial difference which may help the appellant so as to include 'welding electrode' within either of the aforesaid terms for claiming MODVAT/CENVAT Credit on the use of welding electrodes in an industrial unit engaged in production of sugar and molasses. It is, however, pointed out that on and after 10.09.2004, new Rules, i.e., CENVAT Credit Rules, 2004 came into existence and the definition of capital goods and input is contained in Rule 2 (a) and (k), thereof, but for the purpose of present appeal, learned counsels for parties did not dispute that there is no substantial difference in the aforesaid definitions, so far as the question of welding electrodes used in repair and maintenance in Sugar Mill is concerned and, therefore, the judgment in respect to Rules applicable prior to Rules, 2004 would cover the issue in this appeal also. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement of MODVAT Credit for welding electrodes under the Central Excise Act, 1944.

Analysis:
The judgment by the Allahabad High Court pertained to an appeal under Section 35G of the Central Excise Act, 1944, filed by the Revenue against a decision of the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal had allowed the Assessee's claim for entitlement of MODVAT Credit concerning welding electrodes for a specific period. The Court framed a substantial question of law regarding the admissibility of Cenvat Credit on welding electrodes as inputs or capital goods used in the repair and maintenance of plant and machinery.

The counsels for both parties acknowledged that the issue raised in the appeal was similar to a previous judgment in Central Excise Appeal No. 51 of 2008. They also noted the introduction of the CENVAT Credit Rules, 2004, which defined "capital goods" and "input." However, they agreed that there was no substantial difference in the definitions concerning welding electrodes used in repair and maintenance in a Sugar Mill. Therefore, the Court relied on the previous judgment applicable before the Rules, 2004, and ruled in favor of the Revenue and against the Assessee.

Consequently, the Court allowed the appeal, setting aside the Tribunal's order and restoring the order passed by the Commissioners (Appeals) on the matter. The decision clarified the entitlement of MODVAT Credit for welding electrodes under the Central Excise Act, 1944, based on the interpretation of relevant rules and previous judgments.