2018 (7) TMI 677 - AT - Central Excise

CENVAT Credit - welding electrodes - whether welding electrodes used for repair and maintenance of machinery are eligible for credit? - Held that - The Hon ble High Court of Madras in the case of TN News Prints and Paper Ltd. had considered the very same issue and held that the appellants are eligible for credit - the denial of credit is incorrect - appeal allowed - decided in favor of appellant.

Summary

Issues:

1. Eligibility of Cenvat credit for duty paid on welding electrodes used for repair and maintenance of machinery.

Analysis:

The case involved the appellants, who were manufacturers of cement and availed Cenvat credit of duty paid on various items, including welding electrodes. The department contended that the credit for duty paid on welding electrodes was not eligible. A show cause notice was issued, leading to the confirmation of demand, interest, and penalties by the original authority and upheld by the Commissioner (Appeals), prompting the appeal.

The appellant's counsel argued that welding electrodes were used for repair and maintenance of machinery, making them eligible for credit under the definition of inputs integral to the manufacturing process. Citing precedents like the case of National Co-operative Sugar Mills Ltd. Vs. CCE, Madurai and Tamilnadu News Prints and Paper Ltd. Vs. CCE Trichy, the counsel supported the eligibility of welding electrodes for credit.

The Assistant Commissioner reiterated the findings in the impugned order during the proceedings. The key issue for consideration was whether welding electrodes used for machinery repair and maintenance were eligible for credit. The Tribunal referred to the decision of the Hon'ble High Court of Madras in the TN News Prints and Paper Ltd. case, where eligibility for credit was confirmed. Additionally, the Tribunal mentioned the interpretation of the word "includes" in the Ramala Sahkari Chini Mills Ltd. case, where the Apex Court clarified its usage as envisaging the manner and not merely illustrative.

Based on the precedents and legal interpretations, the Tribunal concluded that the denial of credit for welding electrodes was incorrect and set it aside. The impugned order was thus overturned, and the appeal was allowed with any consequential reliefs as necessary. The operative part of the order was pronounced in open court, bringing the matter to a close.