2018 (9) TMI 736 - AT - Central Excise

CENVAT Credit - inputs - Welding Electrodes, Steel Plates, Sheets and Angles which were used exclusively for repair and maintenance within the factory premises - period May 2015 to March 2016 - Held that - There is no dispute as to the fact that the Welding Electrodes, Steel Plates and Sheets, Angles were used exclusively for repairs and maintenance within the factory during the period May, 2015 to March, 2016 - It is seen from the records, these repairs and maintenance was in respect of the plant and machinery which is used for manufacturing of final products was the claim which has not been disputed by the lower authorities. The definition of Input includes all goods used in the factory by the manufacturer of the final products. In the case in hand, it is undisputed that appellant is a manufacturer and has used various inputs in this case, exclusively for repairs and maintenance of plant and machinery which are used for the manufacturing activity. The impugned order has not considered this definition of inputs in its correct perspective - appeal allowed - decided in favor of appellant.

Summary

Issues:
Availment of CENVAT credit on Central Excise duty paid on specific items used for repair and maintenance within factory premises.

Analysis:
The appeal was against an Order-in-Appeal dated 07.03.2018 regarding the availment of CENVAT credit on Welding Electrodes, Steel Plates, Sheets, and Angles used exclusively for repair and maintenance within the factory premises from May 2015 to March 2016. The Adjudicating Authority had dropped the proceedings initiated by a show cause notice, but the Revenue appealed to the First Appellate Authority, which set aside the Order-in-Original based on a judgment of the High Court. The Member (Judicial) found that the Adjudicating Authority was correct in setting aside the demands raised by the show cause notice for various reasons.

The Member noted that the items in question were indeed used exclusively for repairs and maintenance within the factory during the specified period, and this fact was not disputed. The repairs and maintenance were related to plant and machinery used for manufacturing final products. The First Appellate Authority was found to have misunderstood the provisions of Rule 2(k) of the CENVAT Credit Rules, 2004, which defines the term "input." The definition of "input" includes all goods used in the factory by the manufacturer of the final product, which applied to the situation at hand where the items were used for repairs and maintenance of manufacturing machinery.

The Member emphasized that the impugned order did not consider the definition of inputs correctly, leading to the conclusion that the order was unsustainable and needed to be set aside. Consequently, the impugned order was set aside, and the appeal was allowed. The decision was dictated and pronounced in open court.