2017 (11) TMI 224 - AT - Central Excise

CENVAT credit - inputs - welding electrodes - Held that - the assessee is entitled to cenvat credit on welding electrodes as an input - reliance placed in the case of Steel Authority of India Ltd. Vs. CCE & ST, Raipur 2016 (8) TMI 1110 - CESTAT NEW DELHI , where it was held that denial of credit on these welding electrodes not sustainable - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues involved: Appeal against disallowance of cenvat credit on welding electrodes used for maintenance and repair of machinery.

Analysis:

1. Issue of Disallowance of Cenvat Credit: The appeal was filed by the Revenue challenging the order passed by the Commissioner (Appeals) setting aside the Order-in-Original which disallowed cenvat credit on welding electrodes used for maintenance of plant and machinery. The adjudicating authority disallowed the credit and imposed penalties. The Revenue contended that welding electrodes cannot be considered as 'inputs' as they are not integrally connected with the manufacturing process, citing a Tribunal decision. However, the consultant for the assessee argued that welding electrodes used for maintenance and repair should be considered as 'inputs' as they are used in relation to the manufacture of final products. The Tribunal, after considering both parties' submissions and relevant case laws, upheld the Commissioner's decision, stating that the assessee is entitled to cenvat credit on welding electrodes as an 'input' based on various judicial pronouncements supporting the same.

2. Legal Interpretation and Precedents: The Tribunal analyzed the definition of 'input' in the context of welding electrodes used for maintenance and repair activities. The Revenue relied on a Tribunal decision that disallowed credit on welding electrodes not co-extensively used with the manufacturing process. In contrast, the assessee cited several judgments supporting the inclusion of items used for maintenance in the definition of 'input.' The Tribunal considered these precedents, including cases involving sugar mills, steel plants, and cement manufacturers, to conclude that welding electrodes used for maintenance and repair activities qualify as 'inputs' under the law. By aligning with the Commissioner's decision and the established legal principles, the Tribunal upheld the allowance of cenvat credit on welding electrodes for the assessee.

3. Final Decision: The Tribunal, in its order pronounced on 13/09/2017, dismissed the Revenue's appeal, upholding the Commissioner's decision to allow cenvat credit on welding electrodes used for maintenance and repair of machinery. By relying on the legal interpretations provided by various judicial pronouncements and considering the definition of 'input' in the context of the case, the Tribunal found no infirmity in the impugned order. Therefore, the Tribunal upheld the decision in favor of the assessee, emphasizing the applicability of established legal principles and precedents in determining the eligibility of cenvat credit in such cases.