2017 (6) TMI 1102 - AT - Central Excise

CENVAT credit - welding electrodes used directly or indirectly in relation to manufacture of final product - Held that - perusal of the definition of inputs under the old Rules, 1944 and Rule 2 (k) of the CCR, 2004 and also the various decisions relied upon by the appellant wherein it has been consistently held that welding electrodes used for repair and maintenance of machinery is in relation to manufacture of final product and therefore, CENVAT credit is admissible. CENVAT credit - manufacture of pig iron which are further used for repair and maintenance of plant and machinery - Held that - reliance placed in the case of CCE vs. Alfred Herbert (I) Ltd. 2010 (4) TMI 424 - KARNATAKA HIGH COURT wherein the Hon ble Karnataka High Court has held that CENVAT credit in respect of goods which were used for repair and maintenance of plant and machinery is admissible - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT credit on welding electrodes used directly or indirectly in relation to the manufacture of the final product.
- Rejection of CENVAT credit on the manufacture of pig iron used for repair and maintenance of plant and machinery.

Issue 1: Denial of CENVAT credit on welding electrodes:

The case involved appeals against orders passed by the Commissioner (A) denying CENVAT credit on welding electrodes used in the manufacture of the final product. The appellant argued that welding electrodes and other items used for repair and maintenance of plant and machinery are eligible for credit under CCR, 2004. They cited various decisions by High Courts and the Tribunal supporting their claim. The appellant also referred to the Supreme Court's decision in Ramala Sahkari Chini Mills case, where the matter was referred to a Larger Bench. The Larger Bench clarified that the term "input" is broadly interpreted to include items used indirectly in the manufacturing process. The Tribunal found that welding electrodes used for repair and maintenance are indeed in relation to the manufacture of the final product, making them eligible for CENVAT credit.

Issue 2: Rejection of CENVAT credit on pig iron for repair and maintenance:

In another appeal, the denial of CENVAT credit on pig iron used for manufacturing parts for the repair and maintenance of paper mill machinery was contested. The Tribunal examined whether pig iron qualifies as an input under CCR, 2004. Additionally, in a separate appeal, the question of CENVAT credit eligibility on welding steel rods and wires for refurbishing forging dyes was addressed. The Tribunal considered relevant precedents, including a Karnataka High Court judgment allowing CENVAT credit for goods used in the repair and maintenance of plant and machinery. By following the principles established in previous decisions, the Tribunal concluded that the appellants were entitled to CENVAT credit on the value of welding electrodes and other items used for repair and maintenance activities.

Conclusion:

The Tribunal, after considering submissions from both parties and relevant legal provisions, upheld the appellants' claims for CENVAT credit on welding electrodes and other items used for repair and maintenance of plant and machinery. The judgment relied on precedents emphasizing the broad interpretation of the term "input" and the eligibility of goods indirectly related to the manufacturing process. The Tribunal set aside the impugned orders and granted relief to the appellants, emphasizing the settled nature of the issue in favor of the appellants based on established legal principles and precedents.

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