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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 ..... he following substantial question of law:- "Whether welding electrodes used in repairs/maintenance of plant and machinery can be considered as 'input' as defined under Rule 2(g) of Cenvat Credit Rules, 2002?" 2. Appellant - Ambuja Cement Ltd. is engaged in manufacture of clinker and cement falling under Chapter-25 of the Central Excise Tariff Act, 1985. During the relevant period i.e. from November, 2001 to August, 2003 in Tax Case No.52/08 September, 2003 to March, 2004 in Tax Case No.9/08, the appellant availed Modvat credit of Rs.8,04,036/- and Rs.1,90,075/- 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 47 (Tribunal) Union of India Vs Hindustan Zinc Ltd. 2007 (214) ELT 510 (Raj.) Jaypee Rewa Plant Vs. CCE, Raipur 2003 (159) ELT 553 (Tri. LB), J.K. Cotton Spg. Wvg. Mills Co. Ltd. Vs Sales Tax Officer, Kanpur 1997 (91) ELT 34 (SC), Tiruchirappalli Vs. India Cements Ltd. 2009 (238) ELT 411 (Mad.), CCE, Raipur Vs. Birla Jute Industries Ltd. 2001 (135) ELT 280 (Tri.-Del.), and Kunha Yammed Vs. State of Kerala 2001 (129) ELT 11. 8. On the other hand, Shri Bhishma Kinger, learned counsel appearing for the respondents/revenue, argued that only those items falling 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 Stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) ; wherein the Apex Court has interpreted the expression "in the manufacture of goods" (occurring in Section 8(b) of the Central Sales Tax Act, 1956) as under: "The expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process, would, in our judgment, fall 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 Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are necessary for running of plant and up-keeping of the machinery directly involved in the manufacturing and products are eligible to avail Modvat credit. The revenue preferred petition for Special Leave to Appeal (Civil) No. CC 8147 of 2006 against the above judgment of the Rajasthan High Court and the same was dismissed by the Supreme Court vide order dated 6.11.2006. 16. The northern Bench of the Tribunal, New Delhi, in the matter of Birla Jute Industries Ltd. 2001 (135) ELT 280 (Tri.-Del.), held that Modvat credit is admissible for Electrodes and Calibration Gas Mixture (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, repai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in Birla Jute Industries Ltd. 2001 (135) ELT 280 (Tri.-Del.), wherein it has been held that Modvat credit is admissible for Electrodes and Calibration Gas Mixture (Welding equipments), but not admissible for explosives under Rule 57A of the Central Excise Rules, 1944, have been further dismissed by the Supreme Court confirming the observations of the Delhi Tribunal, in view of judgment of the Supreme Court in Jawahar Mills Ltd. 2001 (132) ELT 3 (SC). 21. Shri Bhishma Kinger, learned counsel for the respondents/revenue, vehemently argued that in the matter of SAIL, the Tribunal at Kolkata 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 dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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