2017 (9) TMI 291 - AT - Central Excise

CENVAT credit - welding electrodes used for repair in the factory - Held that - similar issue decided in the case of SAMRUDDHI CEMENT LTD. Versus COMMISSIONER OF CENTRAL EXCISE, INDORE 2012 (9) TMI 885 - CESTAT NEW DELHI , where the credit on welding electrodes has been allowed - credit allowed. CENVAT credit - steel items - Held that - The exact use of the item has not been specified - the matter is remanded to the original adjudicating authority to give a decision after ascertaining the exact use of each item on which credit has been sought. Appeal allowed in part and part matter on remand.

Summary

Issues: Denial of cenvat credit for welding electrodes and steel items by lower authorities.

Analysis:
1. The appellant challenged the denial of cenvat credit for welding electrodes and certain steel items. The appellant relied on decisions from various High Courts to support their claim that cenvat credit for welding electrodes used for repair in the factory cannot be denied. They argued that certain steel items used for making boxes and spare parts in the factory are capital goods. However, no evidence was produced before the lower authorities to support this assertion. The appellant also contended that since the unit was audited in 2010, the extended period of limitation cannot be invoked.

2. The respondent relied on decisions from High Courts to assert that cenvat credit for welding electrodes should not be allowed. The Tribunal noted that the decisions cited by both parties were based on different rules than the Cenvat Credit Rules, 2004. The Tribunal specifically highlighted that the decision of the Hon'ble High Court of Allahabad in the case of Upper Ganges Sugar & Inds. Ltd. was not applicable in this case. The Tribunal referenced various High Court decisions where the credit of welding electrodes had been allowed, emphasizing the broader definition of 'input' under Rule 2(k) of the Cenvat Credit Rules, 2004.

3. The Tribunal concluded that the impugned order was not sustainable concerning the credit of welding electrodes and allowed the appeal on this issue. However, regarding the cenvat credit for certain steel items, the Tribunal found that the exact use of the items had not been examined by the lower authorities. The Commissioner stated that the steel items were used for repairs of machinery, not for the manufacture of capital goods. As neither side provided reasons for this conclusion, the Tribunal set aside the impugned order related to items other than welding electrodes and remanded the matter to the original adjudicating authority for a decision after determining the exact use of each item.

4. Ultimately, the appeal was partly allowed, and the second issue regarding cenvat credit on certain steel items was remanded for further examination. The Tribunal pronounced the judgment on 22/8/17.