2017 (7) TMI 480 - AT - Central Excise

CENVAT credit - capital goods - SS Sheets Air Distributer S. S. Cold rolled coils etc. used in repairing of spray dryer machines - denial on the ground that these items do not fall under the definition of capital goods - Held that - This issue has been considered by this Tribunal in Kissan Sahakari Chini Mills Ltd s case 2013 (7) TMI 2 - CESTAT NEW DELHI where it was held that the activity of repair and maintenance of plant and machinery is an activity which has direct nexus with manufacture of final products and the goods used in this activity would be eligible for Cenvat credit - appeal allowed - decided in favor of assessee.

Summary

Issues:
- Eligibility of CENVAT credit on SS Sheets, Air Distributer S. S. Cold rolled coils used in repairing spray dryer machines under Rule 2(k) of CCR, 2004.

Analysis:
1. The appeal was filed against an order passed by the Commissioner (Appeals) regarding the eligibility of CENVAT credit on certain items used in repairing spray dryer machines. The appellant claimed that the items were capital goods as per Rule 2(a) of CCR, 2004, making them eligible for credit under Rule 2(k) of the same. The appellant cited relevant judgments to support their claim.

2. The Revenue supported the findings of the Commissioner (Appeals) regarding the ineligibility of the CENVAT credit on the mentioned items.

3. The main issue to be decided was whether the items used for repair and maintenance of capital goods in the factory premises were eligible for CENVAT credit as per Rule 2(k) of CCR, 2004. The Tribunal referred to previous judgments, including one by the Hon'ble Rajasthan High Court, to establish that goods used for repair and maintenance of plant and machinery are eligible for CENVAT credit. The Tribunal also discussed the interpretation of the expression "used in or in relation to manufacture of final products" in the definition of input in Rule 2(k) of CCR, 2004.

4. The Tribunal concluded that the repair and maintenance of plant and machinery is crucial for smooth manufacturing, and goods used in this activity have a direct nexus with the manufacture of final products. Therefore, the goods in question were deemed eligible for CENVAT credit. The Tribunal upheld the appellant's appeal, setting aside the impugned order and allowing consequential relief, if any, as per law.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal principles applied by the Tribunal, and the final decision rendered in favor of the appellant regarding the eligibility of CENVAT credit on the items used in repairing spray dryer machines.