2018 (5) TMI 1523 - AT - Service Tax

CENVAT credit - input - 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 - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues involved:
- Entitlement to avail Cenvat credit for duty paid on inputs used in repair and maintenance of plant and machinery.

Analysis:

The appeal in this case was against an order passed by the Commissioner (Appeals) regarding the entitlement to avail Cenvat credit for duty paid on inputs used in repair and maintenance of plant and machinery. The main issue was whether the appellant could claim Cenvat credit for inputs like MS Angles, MS Channels, MS plates, and MS Pipes used in repair and maintenance of their factory's plant and machinery. The Revenue argued that credit was not admissible based on a Board's Circular, stating that the goods were used in the repair and maintenance of capital goods.

The Tribunal considered a Chartered Accountant's Certificate and observed that the inputs were used for fabrication, repairing, and replacement of various plant and machinery components during the relevant period. It was noted that previous Tribunal decisions had allowed Cenvat credit for inputs like MS Angles, Channels, and Beams used in repair and maintenance of plant and machinery. Reference was made to a case involving Hindustan Zinc Ltd., where the High Court held that certain plates used in workshops for repair and maintenance were eligible for Cenvat credit. The Tribunal also cited judgments from other High Courts supporting the eligibility of inputs used in repair and maintenance activities for Cenvat credit.

Additionally, the Tribunal referred to a Supreme Court case to interpret the scope of the expression "in the manufacture of goods" and emphasized that the definition of "input" in the Cenvat Credit Rules, 2004, covers goods used directly or indirectly in the manufacture of final products. It was highlighted that repair and maintenance activities are crucial for smooth manufacturing processes, as malfunctioning machinery can hinder production. Therefore, the Tribunal concluded that goods used in repair and maintenance activities have a direct nexus with the manufacture of final products and are eligible for Cenvat credit based on commercial expediency.

Ultimately, the Tribunal upheld the impugned order, dismissing the Revenue's appeal. The judgment highlighted the importance of repair and maintenance activities in the manufacturing process and affirmed the eligibility of inputs used in such activities for Cenvat credit based on established legal principles and previous court decisions.