2018 (5) TMI 104 - AT - Central Excise

CENVAT credit - input - MS Angles, MS Beam, SS Plate/Coil/ Sheet, Round Bar, Scrap bar, Channel etc. used for repair and maintenance of capital goods - Held that - issue decided in the case of KISAN SAHKARI CHINI MILLS LTD. Versus COMMISSIONER OF C. EX. LUCKNOW 2013 (292) ELT 394 , 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. There is no dispute of the fact that these items were used in the factory for repair and maintenance of the capital goods - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order-in-appeal passed by Commissioner of Central Excise (Appeals) Ahmedabad regarding eligibility of CENVAT credit on materials used for repair and maintenance of capital goods.

Analysis:

Issue 1: Eligibility of CENVAT credit on materials used for repair and maintenance of capital goods
The appellant availed CENVAT credit on items like MS Angles, MS Beam, SS Plate/Coil/Sheet, Round Bar, Scrap bar, Channel for repair and maintenance of capital goods. A Show Cause Notice was issued for recovery of the amount. The Ld. Advocate argued that these items are eligible for credit as per the definition of "input" under Rule 2(k) of CCR, 2004, citing precedents like Shree Kamrej Vibhag Sahakari Khand Udyog Mandli Ltd. CCE 2017 and others. The dispute centered around the eligibility of CENVAT credit for duty paid on these items used for repair and maintenance of capital goods. The Tribunal referred to various judgments including Kisan Sahkari Chini Mills Ltd. and Sarjoo Sahkari Chini Mills Ltd. cases. The Tribunal analyzed the principle of law and observed that goods used for repair and maintenance of plant and machinery are eligible for CENVAT credit. The Tribunal cited judgments from High Courts to support the eligibility of inputs used for repair and maintenance. The Tribunal concluded that the items were used for repair and maintenance of capital goods, making them eligible for CENVAT credit. The impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis provides a comprehensive understanding of the judgment, focusing on the eligibility of CENVAT credit on materials used for repair and maintenance of capital goods. The Tribunal's decision was based on legal principles and precedents, ultimately allowing the appeal in favor of the appellant.