2016 (12) TMI 767 - AT - Central Excise

Cement and clinker - CENVAT credit - Wear Resistant Plates Impact Liner Plates Cooler Sidewall Plates Blow Bar Chains LS Crush Hammers which were used by the appellant for repairs and maintenance of capital goods - Held that - The Hon ble High Court of Karnataka in the case of CCE Bangalore-I Vs Alfred Herbert (India) Ltd. 2010 (4) TMI 424 - KARNATAKA HIGH COURT following the ratio laid in the case of Hindustan Zinc Ltd. 2006 (5) TMI 44 - HIGH COURT RAJASTHAN has held the issue in favor of assessee holding that the credit availed on subject items used for repairs and maintenance of the machinery is eligible for credit. In view thereof following the judgment laid in the above cases as well as taking note of the dropping of proceedings in the subsequent year in the appellant s own case I find that the impugned order is unsustainable. The same is set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues involved:
Admissibility of CENVAT credit on items used for repairs and maintenance of capital goods.

Analysis:
The case involved the appellants, manufacturers of ordinary Portland cement and clinker, who availed CENVAT credit on Wear Resistant Plates, Impact Liner Plates, Cooler Sidewall Plates, Blow Bar Chains, and LS Crush Hammers for repairs and maintenance of capital goods. The department considered these items akin to MS Plates, Angles, Sheets, Joists, Coils, and contended that the credit was inadmissible. A show cause notice was issued demanding duty, interest, and penalty, which was confirmed by the adjudicating authority and the Commissioner (Appeals). The appellants appealed to the Tribunal challenging the decision.

The appellant's counsel argued that the eligibility of items used for repair and maintenance of capital goods for credit had been settled by various decisions of the Tribunal and High Court. They cited the case of Union of India Vs Hindustan Zinc Ltd., where it was held that goods essential for the up-keep and maintenance of plant and machinery, directly used in manufacturing excisable articles, qualified as capital goods eligible for credit. Similarly, the High Court of Karnataka in the case of CCE, Bangalore-I Vs Alfred Herbert (India) Ltd., following the precedent set by Hindustan Zinc Ltd., ruled in favor of the assessee, allowing credit on items used for machinery repairs and maintenance.

Considering the precedents and the dropping of proceedings in the subsequent year for the appellant based on the High Court of Karnataka's judgment, the Tribunal found the impugned order unsustainable. Therefore, the Tribunal set aside the order, allowing the appeal with any consequential reliefs. The judgment emphasized the importance of items used for the maintenance and smooth operation of capital goods in the manufacturing process, supporting the admissibility of CENVAT credit in such cases.