2018 (2) TMI 128 - AT - Central Excise

CENVAT credit - inputs/capital goods/input services - Welding Electrodes - whether credit is admissible to welding electrodes used for repair and maintenance of capital goods? - Held that - The Larger Bench in the case of Ramala Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Meerut - I 2016 (2) TMI 902 - SUPREME COURT had observed that the definition of inputs in the CENVAT Credit Rules as it stood prior to 1.4.2011 cannot be given a restrictive meaning - the denial of credit is unjustified and the appellants are eligible for credit - appeal allowed.

Summary

Issues:
Admissibility of CENVAT credit on welding electrodes used for repair and maintenance of capital goods.

Analysis:
The case involved the appellants, who are manufacturers of cement and clinker, availing the facility of CENVAT credit on inputs, capital goods, and input services. The department raised concerns regarding the admissibility of credit availed on welding rods/electrodes used for repair and maintenance. A show cause notice was issued proposing recovery of irregularly availed credit, interest, and penalties. The original authority, after due process of law, confirmed the demand and imposed penalties, a decision upheld by the Commissioner (Appeals), leading to the current appeal.

The main issue in question was whether credit is admissible on welding electrodes used for repair and maintenance of capital goods. The Tribunal referred to the decision in the case of Ramala Sahkari Chini Mills Ltd. vs. Commissioner of Central Excise, Meerut, where doubts were raised on the interpretation of the term 'inputs' in the CENVAT Credit Rules. The Tribunal observed that the definition of 'inputs' cannot be given a restrictive meaning, as held in the case of Ramala Sahkari Chini Mills Ltd. The Tribunal also noted a previous decision in the appellant's own case where the issue was decided in favor of the appellant, supporting the admissibility of credit on welding electrodes.

After considering the precedents and the arguments presented, the Tribunal held that the denial of credit on welding electrodes for repair and maintenance was unjustified. The appellants were deemed eligible for the credit, leading to the setting aside of the impugned order. The appeal was allowed with consequential relief, if any, in favor of the appellants.