2017 (10) TMI 326 - AT - Central Excise

CENVAT credit - inputs - H.R. Coils Plates SS Sheets M.S. Channels Angle Beam Bars etc. used for repair and maintenance of Capital goods installed in the factory - Held that - there is no dispute of the fact that these items were used in the factory for repair and maintenance of the capital goods in the factory - the issue has been considered in the case of Commissioner of Central Excise Customs And Service Tax Visakhapatnam-I Versus Jindal Stainless Ltd 2015 (6) TMI 821 - CESTAT BANGALORE where it was held that impugned goods were used in conjunction with certain capital goods/machinery they become a part of the machinery as they were used for upkeep of the machinery - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of CENVAT credit on items used for repair and maintenance of capital goods.

Analysis:
The appeal was filed against an order-in-appeal passed by the Commissioner (Appeals-II) Surat, regarding the availing of CENVAT credit on various items used for repair and maintenance of capital goods in the factory. The appellant was issued a Show Cause Notice for recovery of a specific amount for a certain period, which was upheld by the Ld. Commissioner (Appeals), leading to the present appeal.

The appellant argued that the items in question were solely used for repair and maintenance of plant and machinery, not for fabrication or structural work, making them eligible for credit under the definition of 'input' as per Rule 2(k) of CCR, 2004. The appellant cited various cases where similar issues were decided in favor of the appellant, emphasizing the eligibility of such items for credit.

The Revenue, represented by Ld. AR, supported the findings of the Ld. Commissioner (Appeals). After hearing both sides and examining the records, the Tribunal focused on the eligibility of CENVAT credit for duty paid on items used for repair and maintenance of capital goods within the factory. The Tribunal referenced previous cases to support its decision, emphasizing the importance of the nexus between the activity of repair and maintenance and the manufacture of final products.

The Tribunal referred to specific judgments by different High Courts and the Apex Court to establish that the goods used for repair and maintenance of plant and machinery are eligible for CENVAT credit. The Tribunal highlighted the commercial expediency of using such goods in the manufacturing process and the direct nexus between repair and maintenance activities and the production of final goods. Ultimately, the Tribunal set aside the impugned order and allowed the appeals, providing consequential relief as per the law.