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2013 (11) TMI 1036 - AT - Central ExciseEligibility for cenvat credit - Welding electrodes and other goods used for repair and maintenance of plant and machinery Whether the goods used can be treated as inputs and having nexus with the manufacture Held that - Following Hindustan Zinc Ltd. vs. UOI 2008 (7) TMI 55 - HIGH COURT RAJASTHAN and Ambuja Cements Eastern Ltd. vs. CCE, Raipur 2010 (4) TMI 429 - CHHAITISGARH HIGH COURT and J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs. Sales Tax Officer 1964 (10) TMI 2 - SUPREME COURT OF INDIA while interpreting the scope of the expression used in the manufacture in Section 8 (3) (b) of the Central Sales Tax Act, 1956 has held that if a process or activity is so integrally related to the ultimate manufacture of good so that without that process or activity, manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in that process or activity would qualify for special treatment i.e. for being treated as used in manufacture of goods. The scope of the expression used in or in relation to the manufacture of final product whether directly or indirectly in the definition of input in the Cenvat Credit Rules, 2004 would be much more wider and any goods used in any process or an activity having nexus with manufacture of final product would be covered by the definition of input and the goods used in any activity without which the manufacturing operation, though theoretically possible but commercially inexpedient, have to be treated as having nexus with the manufacture and would be eligible for Cenvat credit as input - Repair and maintenance is an activity having nexus with manufacture - the inputs used for repair and maintenance of the plant and machinery would be eligible for Cenvat credit Decided in favour of Assessee.
Issues:
1. Eligibility of Cenvat credit on welding electrodes, asbestos, jointing sheets, plates, SS Plates, Shapes, HR Coils used for repair and maintenance of plant and machinery. 2. Interpretation of judgments regarding eligibility of Cenvat credit for items used in repair and maintenance. 3. Nexus between items used for repair and maintenance and manufacturing process for Cenvat credit. Analysis: Issue 1: Eligibility of Cenvat credit on specific items The appellant, a sugar mill, claimed Cenvat credit for items used in repair and maintenance of plant and machinery. The dispute revolved around the eligibility of Cenvat credit for welding electrodes, asbestos, jointing sheets, plates, SS Plates, Shapes, HR Coils. The department contended these items were not eligible for credit. The Additional Commissioner upheld the denial, imposing penalties. The Commissioner (Appeals) also dismissed the appeal. The appellant argued citing judgments supporting eligibility based on usage for repair and maintenance. Issue 2: Interpretation of Judgments The appellant referenced judgments by various High Courts supporting Cenvat credit eligibility for items used in repair and maintenance. The appellant highlighted the decisions by Rajasthan, Chhattisgarh, and Karnataka High Courts, emphasizing that the items in question were used for repair and maintenance of plant and machinery. The department relied on a Tribunal judgment and the Apex Court's decision regarding the use of certain items for manufacturing supporting structures. Issue 3: Nexus between repair and maintenance items and manufacturing process The Tribunal analyzed the use of welding electrodes, asbestos, plates, SS Plates, Shapes, HR Coils for repair and maintenance. The Tribunal noted that these items were indeed used for repair and maintenance purposes, as acknowledged by both the Additional Commissioner and the Commissioner (Appeals). The Tribunal emphasized the nexus between repair and maintenance activities and the manufacturing process. It cited the Apex Court's interpretation of the term "used in manufacture" to support the broader definition of "input" under the Cenvat Credit Rules. The Tribunal concluded that items used for repair and maintenance are integral to the manufacturing process and thus eligible for Cenvat credit. In conclusion, the Tribunal allowed the appeal, holding that all disputed items were used for repair and maintenance of plant and machinery, making them eligible for Cenvat credit based on relevant judgments and the nexus between repair activities and manufacturing processes.
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