2014 (8) TMI 570 - AT - Central Excise

Denial of CENVAT Credit - Whether the appellants are entitled to avail the CENVAT credit of duty paid on welding electrodes and gases used for repair and maintenance of plant and machinery - Held that;- duty paid on the items used for repairs and maintenance would be available as CENVAT credit - Following decision of Samruddhi Cement Ltd. Vs. C.C.E., Indore 2012 (9) TMI 885 - CESTAT NEW DELHI - Decided in favour of assessee.

Summary

Issues:
Entitlement to CENVAT credit on duty paid for welding electrodes and gases used for repair and maintenance of plant and machinery.

Analysis:
The central issue in this appeal pertains to the entitlement of the appellants to avail CENVAT credit on duty paid for welding electrodes and gases used for repair and maintenance of plant and machinery. The lower authorities had denied the credit, arguing that such activities were not directly associated with the manufacturing process and therefore could not be considered as cenvatable inputs.

The presiding judge noted that the issue had already been settled by various High Courts, including the Hon'ble High Court of Chhattisgarh, Rajasthan, and Karnataka. Referring to the case law, the judge highlighted a recent decision by the Tribunal in the case of Samruddhi Cement Ltd. Vs. C.C.E., Indore, which concluded that duty paid on items used for repairs and maintenance would indeed be eligible for CENVAT credit.

The appellant's counsel cited judgments from the Hon'ble High Court of Chhattisgarh and Rajasthan supporting the availability of CENVAT credit on welding electrodes for repair and maintenance. On the other hand, the Departmental Representative referred to a contrary view taken by the Hon'ble High Court of Andhra Pradesh in a specific case.

After careful consideration, the judge emphasized that the definition of 'input' under Rule 2(k) of the Cenvat Credit Rules, 2004 encompassed goods used "in or in relation to manufacture" of final products, directly or indirectly. The judge reasoned that while repair and maintenance activities themselves were not manufacturing processes, they were crucial for the functioning of machinery essential for manufacturing. Therefore, the judge concluded that such activities were covered under the broader definition of 'used in or in relation to manufacture of final product,' making them eligible for CENVAT credit.

In light of the settled legal position and the reasoning provided, the judge set aside the impugned order and allowed the appeal, granting consequential relief to the appellants. The decision was based on the established legal principles and interpretations of relevant statutes and case law, ensuring consistency with previous judicial determinations on similar matters.