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TMI Blog2007 (3) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... apital goods. 2. The Deputy Commissioner found that the appellant had taken Cenvat credit on welding electrodes in their capital goods Cenvat credit account. It was pleaded by the assessee, as recorded in the order-in-original, that welding electrodes were accessories of brazing/soldering machine which welding machine was used for repairs and maintenance of the plant and machinery. It was held that welding electrodes were not included in the definition of capital goods under Rule 2(b) of the Cenvat Credit Rules, 2002, and these could not be treated as accessories of welding/brazing/soldering machine, and that, these were used as consumables and hence were not components, parts or accessories . It was observed that there was a vital d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Noida v. DSM Ltd., reported in 2003 (162) E.L.T. 987 and of the Larger Bench in Jaypee Rewa Plant v. CCE, Raipur (supra), held that welding electrodes used by the appellant were not eligible for credit as capital goods. It was also held that the alternative plea that credit was allowable as inputs was also not acceptable, since the welding electrodes were used for maintenance of plant and machinery and had not been used in or in relation to the manufacture of the finished goods and to that extent they did not satisfy the definition of inputs. The Appellate Commissioner also relied on the decision of the Tribunal in Kisan Sahakari Chini Mills and Anr. v. CCE, Meerut, reported in 2005 (179) E.L.T. 246 (Tribunal) = 2004 (117) ECR 851, in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that Cenvat rules in effect substitute the Modvat rules, the decision in Jaypee Rewa Cement (supra) would continue to apply. He also relied upon the decision of the Hon ble the Supreme Court in Vikram Cements v. CCE, reported in 2006 (l97) E.L.T. 145, for pointing out that Cenvat credit on inputs, i.e., explosives, lubricating oil etc., the matter was considered to have been squarely covered by the decision in Vikram Cement v. CCE, Indore, reported in 2006 (194) E.L.T. 3 (S.C.) and as regards the Cenvat credit on capital goods, it was held that if the mines are captive mines so that they constituted one integrated unit together with the concerned cement factory, cenvat credit on capital goods will be available but, if they were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J.K. Cotton Spinning Weaving Mills, reported in 1997 (91) E.L.T. 34 (S.C.), held in paragraph 6 of its judgment as under :- According to the above ruling, goods used in any particular activity in the course of the entire process of converting raw materials into finished goods would be held to have been used in the manufacture of goods . Repairs and maintenance of machinery are not normally done when the process of manufacture of goods with such machinery is under way. They are not a part of, or integrally connected with, the process of manufacture of final product. The Welding electrodes and gases used by the appellants for repairs and manufacture of machinery cannot be considered to have been used in relation to the manufacture of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Modvat and Cenvat credit being different and in view of the definition of input given in sub-rule (d) of Rule 57AA of the Rules and the omission of rule similar to Rule 57J, the ratio of Jaypee Rewa Cements could have no application. In Jaypee Rewa Cements, it had been held by the Hon ble the Supreme Court that the Modvat scheme was different and distinct from the Cenvat scheme. The appeal before the Supreme Court had arisen against the order of the Tribunal in Vikrain Cements in which the Tribunal had following the ratio of the decision in CCE, Jaipur v. J.K. Cement Udaipur Udyog Ltd. (supra) held that input credit was not available for the reason that the goods, namely explosives, lubricating oil, welding electrodes and crusher were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as an input for the purpose of Rule 57A does not, in any way, specify that the inputs have to be utilized within the factory premises. The explanation contained in Rule 57A was merely meant to enlarge the meaning of input and does not in any way reflect the use of input within the factory premises, nor did the said rule 57A require the input to be brought into the factory premises at any point of time. It will thus be seen that the entire controversy centered around the question whether the inputs used in relation to the manufacture for being eligible for Cenvat credit must necessarily be utilized within the factory premises. It is in the background of this question that the matter came to be referred in Vikram Cements for a decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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