2017 (6) TMI 99 - AT - Central Excise

CENVAT credit - Steel Plate or Sheets, Bar Rounds etc., used for the purpose of repairing and maintenance of their capital goods - inputs or not? - Held that - the issue has been considered by this Tribunal in Kissan Sahakari Chini Mills Ltd s case 2013 (7) TMI 2 - CESTAT NEW DELHI , where it was held that the activity of repair and maintenance of plant and machinery is an activity which has direct nexus with manufacture of final products and the goods used in this activity would be eligible for Cenvat credit - credit allowed - decided in favor of assessee.

Summary

Issues:
- Appeal against OIA No.67-2013-RAJ-CE-AK-COMMR-A-AHD
- Eligibility of CENVAT credit for Steel Plates, Sheets, Round Bars used in repair and maintenance of capital goods

Analysis:
1. The appeal was filed against OIA No.67-2013-RAJ-CE-AK-COMMR-A-AHD, dated 26/02/2013, passed by the Commissioner (Appeals) of Central Excise-Rajkot. The appellant was alleged to have wrongly availed and utilized CENVAT credit during 2008-2009 to 2009-2010 for Steel Plates, Sheets, Round Bars used in repairing and maintaining capital goods. The demand was confirmed with interest and penalty by the adjudicating authority. The appellant then appealed to the Ld. Commissioner (Appeals), whose decision was unfavorable, leading to the present appeal.

2. The appellant contended that the items in question were used for repair and maintenance of capital goods, falling under the definition of input as per Rule 2(a) A of CCR, 2004. The advocate referred to relevant judgments to support the claim. The Revenue's representative reiterated the findings of the Ld. Commissioner (Appeals).

3. The Tribunal analyzed whether the Steel Plates, Sheets, Round Bars used for repairing and maintaining capital goods were eligible for CENVAT credit under Rule 2 (k) of CCR, 2004. Citing precedents, the Tribunal noted that the inputs used for repair and maintenance of plant and machinery were eligible for CENVAT credit. The Tribunal emphasized the nexus between the repair and maintenance activity and the manufacture of final products, stating that such activity is commercially essential for manufacturing. The Tribunal upheld the appellant's claim, setting aside the impugned order and allowing the appeal with consequential relief, if any.

In conclusion, the Tribunal's judgment favored the appellant, establishing the eligibility of CENVAT credit for Steel Plates, Sheets, Round Bars used in the repair and maintenance of capital goods based on legal precedents and the commercial necessity of such activities in the manufacturing process.