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2023 (2) TMI 438 - AT - Service TaxLevy of service tax - repair and maintenance activity or not - year 2008 (i.e. prior to amendment from 1st March, 2011) - HELD THAT - The Tribunal while taking note of the decision in the case of SAIL VERSUS COMMISSIONER OF C. EX., RANCHI 2007 (7) TMI 152 - CESTAT, KOLKATA took a view in favour of the assessee considering the decision of three High Courts wherein it has been held that credit is eligible on welding electrodes. It has also been observed therein that mere dismissal of SLP by the Supreme Court against the decision rendered by the Tribunal will not be considered to be law since not decided by the Apex Court. The facts of the present case are squarely covered by the aforesaid decision - Appeal allowed.
Issues: Eligibility of welding electrodes for Cenvat credit.
Analysis: The issue of eligibility of welding electrodes for Cenvat credit was examined in the case of CCE Meerut vs. Bajaj Hindustan Ltd., where the Tribunal ruled in favor of the appellant based on previous judgments of three High Courts. The Tribunal emphasized that mere dismissal of SLP by the Supreme Court against the Tribunal's decision does not establish a legal precedent. The Tribunal considered the nexus between the activity in which the welding electrodes are used and the manufacturing process, concluding that the appellant is eligible for Cenvat credit. The Tribunal set aside the Cenvat credit demand and dismissed the Revenue's appeal for imposing a penalty. In a similar vein, the Tribunal referred to the case of Manikgarh Cement vs. Commissioner of Central Excise, Nagpur, where the appellant challenged the denial of Cenvat credit on welding electrodes and D.A. Gas. The appellant argued that these items qualify as inputs under the amended CENVAT Credit Rules, 2004, and also as capital goods. The appellant cited various case laws to support their claim that the definition of "inputs" had been broadened to include welding electrodes and D.A. Gas. The Tribunal agreed with the appellant, emphasizing that these items were essential for the smooth manufacturing process and were eligible for Cenvat credit. The Tribunal modified the order denying Cenvat credits, allowing the appeal and providing relief to the appellant. The Tribunal rejected the Respondent-Department's argument that manufacture and repair/maintenance are distinct processes not linked to the final product, citing a judgment of the Hon'ble Andhra Pradesh High Court. However, the Tribunal upheld the appellant's position that welding electrodes and D.A. Gas were crucial for maintaining the plant and machinery used in the manufacturing process. The Tribunal highlighted that the definition of "inputs" under Rule 2(k)(i) includes goods used indirectly in the manufacturing process, excluding those with no relationship to the final product. The Tribunal concluded that the credits availed by the appellant on welding electrodes and D.A. Gas were valid and rightly claimed. In light of the above discussions and precedents, the Tribunal set aside the impugned orders, allowing the appeals filed by the appellants and granting them consequential relief as per the law. The Tribunal found that the facts of the cases were in line with the decisions cited, confirming the eligibility of welding electrodes for Cenvat credit and ruling in favor of the appellants.
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