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TMI Blog2010 (4) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... 75/- respectively on welding electrodes used in manufacture of parts and components of the capital goods and also in repairs and maintenance of the capital goods within the factory of production. The appellant was served with show cause notices, proposing to deny Cenvat credit on welding electrodes under Rule 12 (g) of the Cenvat Credit Rules, 2002 read with Section 11A of the Central Excise Act, 1944 and also proposing to impose penalty under Rule 13 of the Rules and recover interest from the appellant under Rule 12 of the Rules read with Section 11AB of the Central Excise Act, 1944. The appellant filed reply to the show cause notices and contended that welding electrodes have been used for manufacture of parts and components of the plant and machinery/capital goods used within the factory and some electrodes have also been used for repairs and maintenance of the plant/machinery/capital goods. 3. However, the Dy. Commissioner of Central Excise, Raipur rejected the submission of the appellant and disallowed Cenvat credit availed by the appellant and imposed penalty of Rs.50,000/- in both the cases. 4. The appeals preferred by the appellant before the Commissioner (Appeals) we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under the specified chapters/headings, their spare parts/components/accessory or otherwise specified and used in the factory of manufacture of final product, are entitled to be treated as 'capital goods' and no item can be treated as capital goods by adopting an interpretative process. The Tribunal has dismissed the appeals of the appellant by following the decision of the larger Bench of the Tribunal in case of Jaypee Rewa Cement 2003 (159) ELT 553 (Tri. LB), in which it was held that welding electrode, is not admissible for Cenvat credit. He further argued that Kolkata Bench of the Tribunal in the matter of Steel Authority of India Ltd. Vs CCE, Ranchi 2008 (222) ELT 233 (Tri.-Kolkata), relying upon the decision of the larger Bench in case of Jaypee Rewa Plant, observed that the decision of Jaypee Rewa Plant has not been appealed against or reversed, and held that the goods which are used in the process of such manufacture are eligible to Modvat credit, while denying the credit on gases and welding electrodes etc. which are used for welding, repairing and maintenance of the machineries. The aforesaid judgment was challenged by SAIL by filing Special Leave to Appeal (Civil) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the expression 'in the manufacture of goods'." 13. The decision in Jaypee Rewa Plant 2003 (159) ELT 553 (Tri. LB). came into consideration before the Rajasthan High Court in the matters of Hindustan Zinc Ltd., 2008 (228) ELT 517 (Raj.), involving similar issue - "whether welding electrodes used for repair and maintenance of plant and machinery are eligible for Cenvat credits, both as capital goods as well as inputs?" The High Court relying upon the decision of the Supreme Court in case of Jawahar Mills Ltd. 2001 (132) ELT 3 (SC), in Paras 11 & 12 observed thus: "11. In our view, the judgment of Hon'ble Supreme Court, in J K Cottons SPG & WVG Mills Co. Ltd Vs. Sales Tax Officer, Kanpur, reported in 1997 (91) ELT 34, has a material bearing on the controversy involved in the present case. It may be noticed, that the tribunal in J.P. Rewa case has referred to this judgment of Hon'ble Supreme Court in JK Cotton's case, by reproducing a part of the head note, but then, the very significant continuing next sentence has been omitted from consideration, inasmuch as the sentence following the portion quoted by the tribunal, is as under: "They need not be ingredients or commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re (Welding equipments), but not admissible for explosives under Rule 57A of the Central Excise Rules, 1944. Civil Appeals preferred by the revenue against the above order were again dismissed by the Supreme Court with an observation that the civil appeals have to be dismissed in view of the judgment of this Court in Jawahar Mills Ltd. 2001 (132) ELT 3 (SC), (Commissioner Vs. Birla Jute & Inds. Ltd. 2002 (139) ELT A93 (SC). 17. The Kolkata Tribunal in the matter of SAIL 2008 (222) ELT 233 (Tri.-Kolkata), held that Modvat Credit on goods and welding electrodes etc. which are used for welding, repair and maintenance of machineries, is not admissible. Relying upon the decision in Jaypee Rewa Plant 2003 (159) ELT 553 (Tri. LB), it has been observed that the decision in this matter has not been appealed against or reversed. SAIL filed a petition for special leave to appeal against the above decision and dismissing the SLP, the Supreme Court passed the following order: "Delay condoned. On the facts of this case, matters stand dismissed." (Steel Authority of India Ltd. Vs. Commissioner- 2003 (229) ELT. A127 (S.C.) 18. In case of Birla Jute & Industries Ltd. 2001 (135) ELT 280 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta relying upon the decision in Jaypee Rewa Plant has held that Modvat credit on goods and welding electrodes etc. which are used for welding, repairing and maintenance of machineries, is not available under Rule 57A of the erstwhile Central Excise Rules, 1944. SAIL's Special Leave Petition against the above order of Kolkata Tribunal has been further dismissed and therefore, the view taken in Jaypee Rewa Plant is impliedly affirmed by the Supreme Court. We are unable to accept the aforesaid argument as we find that SLP against the decision of Kolkata Tribunal in SAIL has been summarily dismissed without any speaking order, whereas the Rajasthan High Court in Hindustan Zinc Ltd., after considering the larger Bench decision of the Tribunal in Jaypee Rewa Plant , has observed that the matter has been decided by selectively referring to the decision of the Supreme Court in JK Cotton's case, and decided the matter by omitting the very significant continuing next sentence. Paras 11 & 12 of Hindustan Zinc Ltd . have already been reproduced in the foregoing paragraph for ready reference. 22. Thus, decision in the matter of Jaypee Rewa Plant is not a good law in view of above judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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