2009 (9) TMI 484 - AT - Central Excise

Cenvat Credit- Inputs- Welding electrodes apparently used in connection with repair and maintenance of pipelines in factory of manufacturer. Electrodes obviously used in welding machines. However Tribunal in case of Vikram Cement 2009(242) ELT 545 (Tri.) held that welding electrodes cannot be considered as inputs within meaning of expression under Cenvat Credit Rules 2002. Demand-Limitation- Periodical returns filed including returns under Rule 57AE of erstwhile Central Excise Rules 1944 where description of goods on which credit taken furnished. No provision shown where use of every input/capital goods to be separately mentioned by party in returns. Invocation of extended period of limitation not justified. Penalty- disputes and differing decisions on availability of credit on welding electrodes. No justification for for imposition of penalty.

Summary

Issues involved:
1. Classification of welding electrodes as capital goods.
2. Classification of aluminium sheets as capital goods.
3. Applicability of extended period of limitation.
4. Imposition of penalty.

Classification of welding electrodes as capital goods:
The appellant, a manufacturer of chemicals, argued that welding electrodes used in maintaining pipelines should be considered as capital goods under Chapter subheading 85153910. They relied on tribunal decisions and disputed the exclusion clause added to Rule 2(k) regarding Cenvat credit. The Tribunal, citing a previous decision, held that welding electrodes cannot be considered as inputs for Cenvat credit, thus denying the appellant's claim.

Classification of aluminium sheets as capital goods:
The appellant claimed that aluminium sheets used as lining material for trays should be considered as parts or accessories of capital goods. The Tribunal agreed that the aluminium sheets were used in manufacturing final products and were eligible for duty credit, setting aside the lower authorities' orders on this issue.

Applicability of extended period of limitation:
The Tribunal found that the party had filed returns indicating goods on which credit was taken, and the use of welding electrodes was implied in the returns. Thus, the invocation of the extended period of limitation was deemed unjustified, and the demand related to welding electrodes needed to be reworked within the normal limitation period.

Imposition of penalty:
Given the disputes and differing decisions on the availability of credit on welding electrodes, the Tribunal found no justification for imposing a penalty. Therefore, the appeal for the restoration of the penalty imposed by the original authority was rejected.

Final Disposition:
(a) The demand concerning aluminium sheets was set aside.
(b) The demand related to welding electrodes was upheld but within the normal limitation period, to be reworked by the original authority.
(c) The decision of the Commissioner (Appeals) in setting aside the penalty was upheld.