2015 (2) TMI 1328 - HC - Central Excise

CENVAT credit - inputs/capital goods - welding electrodes - period January' 2005 to June' 2005 - Whether the appeal filed by appellants before CESTAT under Section 35B of Central Excise Act, 1985 could be dismissed by CESTAT summarily under second proviso to Section 35B in the circumstances when clause (d) of first proviso (relating to credit of duty) inserted vide Section 109 of the Finance (No. 2) Act, 1998 had not yet been notified and made effective? HELD THAT - The issue decided in the case of 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 (hereinafter referred to as 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 dismissed - decided against assessee.

Summary

Issues:
1. Dismissal of appeal by CESTAT under Section 35B
2. Eligibility of MODVAT Credit for welding electrodes as input under Cenvat Credit Rules, 2004

Issue 1: Dismissal of appeal by CESTAT under Section 35B
The High Court considered whether the appeal filed by the appellants before CESTAT could be summarily dismissed under the second proviso to Section 35B of the Central Excise Act, 1985. The question arose due to the non-notification of clause (d) of the first proviso, which relates to the credit of duty under the Finance (No. 2) Act, 1998. The Court examined the legal implications of this non-notification and its impact on the dismissal of the appeal by CESTAT.

Issue 2: Eligibility of MODVAT Credit for welding electrodes
The Court deliberated on whether welding electrodes used in the appellant's factory for repairs and maintenance of production machinery could be considered as 'input' under Rule 2(k) of the Cenvat Credit Rules, 2004. The parties acknowledged that the new Rules, i.e., CENVAT Credit Rules, 2004, came into effect after 10.09.2004, containing definitions of 'capital goods' and 'input' in Rule 2(a) and (k). However, both parties agreed that there was no substantial difference in the definitions concerning the usage of welding electrodes for repair and maintenance in a Sugar Mill. The Court relied on a previous judgment in M/S DSM Sugar Asmoli Vs. Commissioner Of Central Excise, Meerut-II to address this issue, ultimately ruling in favor of the Revenue and against the Assessee.

In conclusion, the High Court dismissed the appeal, citing the reasons provided in the aforementioned judgment and ruling in favor of the Revenue. No costs were awarded in this matter.