2013 (10) TMI 789 - AT - Central Excise

CENVAT Credit Waiver of Pre-deposit - Revenue was of the view that the items are neither inputs nor capital goods and hence are not eligible for Cenvat Credit - Whether the goods used for repair and maintenance of the plant and machinery are eligible for Cenvat Credit or not MS Plates, Sections, Shapes, Channels, Roller Chains etc. - Held that - The items have been used for repair & maintenance of the machinery and not for fabrication of capital goods, that the items used for repair & maintenance of plant and machinery are eligible for Cenvat Credit as input - denying the Cenvat Credit in respect of these items on the ground that the same have not been used for fabrication of capital goods is not connect - Following Ambuja Cements Eastern Ltd. Vs. CCE Raipur 2010 (4) TMI 429 - CHHAITISGARH HIGH COURT and Union of India Vs. Hindustan Zinc Ltd. 2006 (5) TMI 44 - HIGH COURT RAJASTHAN - the appellant have strong prima facie case in their favour - the requirement of pre-deposit of Cenvat Credit demand, interest and penalty waived for hearing of the appeal and recovery stayed till the disposal of the appeal - stay granted.

Summary

Issues:
1. Eligibility for Cenvat Credit on MS Plates, Sections, Shapes, Channels used in repair and maintenance of plant and machinery.
2. Validity of Additional Commissioner's order confirming Cenvat Credit demand and imposing penalty.
3. Appeal against Commissioner (Appeals) order upholding Additional Commissioner's decision.

Analysis:
The judgment revolves around the eligibility of Cenvat Credit for items like MS Plates, Sections, Shapes, Channels used in repairing and maintaining plant and machinery. The Department contended that these items are neither inputs nor capital goods, thus not eligible for Cenvat Credit. A Show Cause Notice was issued for recovery of Cenvat Credit along with interest and penalty. The Additional Commissioner confirmed the Cenvat Credit demand and imposed a penalty. The Commissioner (Appeals) upheld this decision, leading to the current appeal and stay application.

During the hearing, the appellant's counsel argued that the items were indeed used for repair and maintenance, making them eligible for Cenvat Credit as inputs. She cited judgments from various High Courts to support her case. On the other hand, the Joint CDR opposed the stay application, reiterating the findings of the Commissioner (Appeals) that goods used for repair and maintenance are not eligible for Cenvat Credit.

The judge, after considering both sides' submissions and reviewing the records, found that the issue of eligibility for Cenvat Credit on items used for repair and maintenance had been decided in favor of the appellant by judgments from multiple High Courts. Therefore, the judge ruled in favor of the appellant, waiving the requirement of pre-deposit and staying the recovery of Cenvat Credit demand, interest, and penalty until the appeal's disposal. The stay application was allowed, providing relief to the appellant pending the final decision on the appeal.