2019 (2) TMI 405 - AT - Central Excise

CENVAT Credit - capital goods - welding electrodes used for fabrication and repairs and maintenance within the factory premises - time limitation - Held that - In the appellant s own case on similar and identical issue of denial of CENVAT credit on welding electrodes was decided by this Bench in M/S ULTRATECH CEMENTS LTD. VERSUS THE COMMISSIONER C. CE&ST, GUNTUR 2016 (10) TMI 1169 - CESTAT HYDERABAD which holds a view that appellant are eligible for CENVAT credit. Supreme Court in the case of Ramala Sahkari Chini Mills Ltd 2016 (2) TMI 902 - SUPREME COURT has held that welding electrodes used in the maintenance of machines are eligible for CENVAT credit. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of CENVAT credit on welding electrodes by the assessee.
2. Revenue's appeal against the dropping of demands raised by invoking an extended period.

Analysis:

Issue 1: Denial of CENVAT credit on welding electrodes by the assessee

The appellant availed CENVAT credit on welding electrodes during a specific period, which was later challenged by the revenue. The audit party noted discrepancies and issued a show cause notice for demanding the credit back, invoking the extended period. The appellant argued that the welding electrodes were used for fabrication, repairs, and maintenance within the factory premises, making them eligible for CENVAT credit. The adjudicating authority upheld the demands, citing the extended period, but the first appellate authority set aside the demands, considering the appellant's regular return filings and the revenue's awareness of the same. The appellant cited precedents and judgments, including the Supreme Court's ruling in Ramala Sahkari Chini Mills, to support their claim that welding electrodes used for maintenance are eligible for CENVAT credit.

Issue 2: Revenue's appeal against the dropping of demands raised by invoking an extended period

The departmental representative contended that welding electrodes used were not eligible for CENVAT credit, referring to judgments by various High Courts. However, the Tribunal found in the appellant's favor, citing a previous decision on a similar issue and the Supreme Court's interpretation of the term "input" in the Cenvat Credit Rules. The Tribunal highlighted that the judgments referenced by the departmental representative did not consider the Supreme Court's ruling, leading to the conclusion that the appeal of the assessee should be allowed, while the appeal of the revenue should be rejected.

In conclusion, the Tribunal allowed the appeal of the assessee, holding that welding electrodes used for maintenance within the factory premises are eligible for CENVAT credit. The revenue's appeal, challenging the dropping of demands raised by invoking an extended period, was rejected based on the interpretation of relevant legal provisions and precedents.