2018 (8) TMI 1974 - AT - Central Excise

CENVAT Credit - capital goods - Welding Electrodes - Tool Bit/Tool Bit Blanks - It is the case of the Revenue that Welding Electrodes and Tool Bit/ Tool Bit Blanks are neither specified as capital goods nor are they same parts/accessories/components etc. of any of the capital goods installed in the factory - Period of dispute is from April 2014 to December 2014 for an amount of 29, 799.32 and for the period from January 2015 to December 2015 for an amount of 1, 02, 140/- totaling to 1, 31, 939.32. HELD THAT - The Welding Electrodes are used in making parts and accessories of the rolling mills for immediate replacement of sudden broken parts like impellers conveyors part etc. to keep the mill in running condition and also for the purpose of maintenance. Similarly Tool Bit/Tool Bit Blanks are used for machining grooving etc. of rolls small repairing of the various channels for the movement of molten materials to keep the mill running. It is not in dispute that the use of impugned items i.e. Welding Electrodes and Tool Bit/ Tool Bit Blanks has been used in repair and maintenance of the capital goods or making of certain parts components and spares of the capital goods - Hon ble High Court of Rajasthan in the case of UNION OF INDIA VERSUS HINDUSTAN ZINC LTD. 2006 (5) TMI 44 - HIGH COURT RAJASTHAN held that MS/SS plates used in workshop meant for repair and maintenance of machinery which are used for manufacture of final product and such goods which are necessary for running of plant and upkeeping of machinery directly involved in the manufacturing of products held to be eligible to avail Modvat Credit. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Entitlement to CENVAT Credit on Welding Electrodes and Tool Bit/Tool Bit Blanks as capital goods.

Analysis:

Issue 1: Entitlement to CENVAT Credit
The case involved the question of whether the appellant was entitled to avail CENVAT Credit of Central Excise duty on Welding Electrodes and Tool Bit/Tool Bit Blanks as capital goods. The period of dispute was from April 2014 to December 2015, totaling to ?1,31,939.32. The Revenue alleged wrong availment of CENVAT Credit, arguing that these items were not specified as capital goods nor were they parts of any capital goods in the factory.

Issue 2: Use of Welding Electrodes and Tool Bit/Tool Bit Blanks
It was found that Welding Electrodes were used for immediate replacement of parts in rolling mills and for maintenance purposes to keep the mill running. Similarly, Tool Bit/Tool Bit Blanks were used for machining and repairing various components necessary for the mill's operation.

Issue 3: Legal Precedents
The judgment referred to legal precedents to support the appellant's claim. The High Court of Rajasthan in previous cases held that items used for repair, maintenance, and upkeep of machinery directly involved in manufacturing processes are eligible for credit. Additionally, the Tribunal in a separate case decided that Tool Bits are part of machines and thus eligible for capital goods credit.

Final Decision
Considering the discussions and legal precedents, the Tribunal set aside the demand of ?1,31,939.32. The appeal was allowed in favor of the appellant, with consequential benefits granted if applicable.

This detailed analysis covers the issues of entitlement to CENVAT Credit, the use of specific items in question, relevant legal precedents, and the final decision of the Tribunal in the case.