2017 (9) TMI 149 - AT - Central Excise

CENVAT credit - H.R. Coils, Plates, SS Sheets, M.S. Channels, Angle, Beam, Bars etc., used for repair and maintenance of Capital goods installed in the factory - Held that - similar issue decided in the case of KISAN SAHKARI CHINI MILLS LTD. Versus COMMISSIONER OF C. EX. LUCKNOW 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 - these items were used in the factory for repair and maintenance of the capital goods, hence duty paid on these items are eligible to credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of CENVAT credit on items used for repair and maintenance of capital goods.

Analysis:
The appeal was filed against an order-in-appeal passed by the Commissioner (Appeals) Vadodara, confirming a demand for recovery of a specific amount related to CENVAT credit availed on various items used for repair and maintenance of capital goods in the factory. The appellant argued that the items in question were eligible for credit as per the definition of input under Rule 2(k) of CCR, 2004, citing relevant judgments in support of their claim. The Ld. Advocate for the appellant emphasized that the disputed items were crucial for the repair and maintenance of plant machinery, hence qualifying for credit based on legal precedents.

The core issue revolved around the interpretation of the definition of input under Rule 2(k) of CCR, 2004 concerning the eligibility of CENVAT credit on duty paid for items utilized in the factory for the repair and maintenance of capital goods. The Tribunal referenced several judgments, including those of Kisan Sahkari Chini Mills Ltd. and others, to analyze the matter. Notably, the Tribunal highlighted the principle established in the case of Hindustan Zinc Ltd., where it was held that items like MS/SS plates used for repair and maintenance of plant machinery are eligible for CENVAT credit. The Tribunal further referred to the Apex Court's interpretation in J.K. Cotton SPG & WVG Mills Co. Ltd. v. Sales Tax Office, emphasizing the broad scope of the expression "used in or in relation to manufacture of final products" in the definition of input under Rule 2(k) of the Cenvat Credit Rules, 2004.

After considering the arguments and legal precedents, the Tribunal concluded that the disputed items, being used for repair and maintenance of capital goods in the factory, were indeed eligible for CENVAT credit. As a result, the impugned order was set aside, and the appeals were allowed, providing consequential relief as per the law. The decision was based on the premise that activities like repair and maintenance of plant machinery are integral to the manufacturing process, and items used for such purposes qualify for CENVAT credit due to their direct nexus with the production of final goods.