2015 (5) TMI 201 - AT - Central Excise

Denial of CENVAT Credit - whether cenvat credit is available on welding electrodes used in repair and maintenance of plant and machinery installed in the factory of the appellant, which is used in the manufacture of final product. - Held that - It is undisputed fact of the case that the appellant has availed credit on welding electrodes which were admittedly used for repair and maintenance of plant and machinery. Though initially the appellant claimed cenvat credit under input, but during adjudication, they made alternate claim before the adjudicating authority under capital goods. - cenvat credit on welding electrodes if used for repair and maintenance of plant and machinery, is admissible. As regards the reliance placed by the Revenue on the various judgments, it is observed that all the judgments are mainly on the issue whether cenvat credit on welding electrodes is available under input. However, as per the judgments on which reliance is placed by the appellant, wherever the welding electrodes were used for repair and maintenance of plant and machinery, cenvat credit has been allowed. - welding electrodes are used for repair and maintenance of plant and machinery, the appellant is entitled for cenvat credit - Decided in favour of assessee.

Summary

Issues:
Cenvat credit availability on welding electrodes used in repair and maintenance of plant and machinery.

Analysis:
The appeal challenged the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals) that allowed the Revenue's appeal against the original order. The central issue revolved around the availability of cenvat credit on welding electrodes utilized in repairing and maintaining plant and machinery in the factory for manufacturing the final product.

The appellant's counsel argued that the welding electrodes could be considered under capital goods for cenvat credit, citing precedents from various judgments by the Tribunal, High Courts, and the Supreme Court. The cases referred to included UOI vs. Hindustan Zinc Ltd., Ambuja Cements Eastern Ltd. vs. CCE, and others, establishing that cenvat credit on welding electrodes for maintenance and repair purposes is permissible.

On the contrary, the Revenue contended that welding electrodes do not qualify as inputs for the final product's manufacture, as per the Cenvat Credit Rules, 2004. They relied on judgments like SAIL vs. CCE and Lloyd Metals & Engineers Ltd. vs. UOI to support their argument against allowing cenvat credit on welding electrodes initially claimed as inputs.

After considering both parties' submissions, the Tribunal acknowledged that the appellant had used welding electrodes for plant and machinery repair and maintenance, even though initially claimed as input credit. The Tribunal's analysis of the cited judgments revealed that cenvat credit on welding electrodes used for plant and machinery repair was permissible, contrary to the Revenue's argument based on judgments focusing on the availability of credit under inputs.

Consequently, the Tribunal concluded that since the welding electrodes were indeed used for plant and machinery repair and maintenance, the appellant was entitled to cenvat credit. The appeal was allowed, and the impugned order was set aside, providing consequential relief as per the law.

In summary, the Tribunal's judgment clarified the admissibility of cenvat credit on welding electrodes used for plant and machinery repair and maintenance, emphasizing the distinction between input credit and capital goods credit in such scenarios.