2018 (5) TMI 1507 - AT - Central Excise

CENVAT credit - input services - MS Angles, MS Channels, MS plates and MS PIPES etc. used in repair and maintenance of plant and machinery in their factory - Held that - This Tribunal consistently held that MS Angles, Channels, Beams etc., used in Repair and Maintenance of Plant and Machinery in the factory is admissible to credit - appeal dismissed - decided against appellant-Revenue.

Summary

Issues Involved:
Whether the appellant is entitled to avail Cenvat credit for duty paid on inputs used in repair and maintenance of plant and machinery.

Analysis:
The appeal was filed against the order-in-appeal passed by the Commissioner (Appeals), Central Excise, and GST-Rajkot. The main issue in the appeal was whether the appellant could claim Cenvat credit for duty paid on inputs like MS Angles, MS Channels, MS plates, and MS PIPES used in the repair and maintenance of plant and machinery in their factory. The Revenue argued that credit was not admissible for these inputs as per the Board's Circular, stating that the goods were used in the repair and maintenance of capital goods. However, the Tribunal noted that the inputs were used for fabrication, repairing, and replacement of plant and machinery during the relevant period. The Tribunal referred to previous cases and observed that inputs like MS Angles, Channels, Beams used in the repair and maintenance of plant and machinery in the factory are admissible for credit.

The Tribunal cited judgments from various High Courts, such as the Rajasthan High Court, Chhattisgarh High Court, and Karnataka High Court, which held that inputs used for repair and maintenance of plant and machinery are eligible for Cenvat credit. The Tribunal also referred to the Supreme Court's interpretation of the expression "in the manufacture of goods" and highlighted that the definition of 'input' in the Cenvat Credit Rules, 2004, is broader, covering goods used in any process integral to the ultimate manufacture of goods. It emphasized that repair and maintenance of plant and machinery is crucial for smooth manufacturing and directly connected to the manufacture of final products. Therefore, goods used in this activity are eligible for Cenvat credit based on the nexus with the manufacture of final products.

Ultimately, the Tribunal upheld the impugned order, dismissing the Revenue's appeal. The judgment emphasized the commercial essentiality of repair and maintenance activities for the manufacture of final products and highlighted the importance of determining nexus based on whether the activity is commercially essential for manufacturing.