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TMI Blog2013 (9) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... tems namely MS bars, MS plates and Sections, HR Plates etc. and other items of Chapter 383976 namely jointing sheets etc. These items were used either for repair and maintenance of the plant and machinery or for modification of the existing plant and machinery. The total credit taken in respect of these items is Rs.2,79,80,207/-. The department was of the view that these items are neither covered by the definition of capital goods as given in Rule 2 (a) of Cenvat Credit Rules, 2004 nor are covered by the definition of inputs as given in Rule 2 (k) of Cenvat Credit Rules 2004 and hence the Cenvat credit in respect of these items is not admissible. On this basis, three show cause notices, the details of which are given below were issued to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed items have been used either for repair and maintenance of the various capital goods or for modification of the same, that these items have to be treated as used in or in relation to the manufacture of the final product, that Hon'ble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur reported in 2010 (256) E.L.T. 690 (Chhattisgarh) has held that welding electrodes used for repair and maintenance of the plant and machinery of the cement plant are eligible for Cenvat credit, that the ratio of this judgment of Hon'ble Chhattisgarh High Court is squarely applicable to the facts of this case, that Hon'ble Rajasthan High Court in the case of Union of India vs. Hindustan Zinc Ltd. reported in 2007 (214) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2011 (273) E.L.T. 10 (S.C.), wherein while deciding the question as to whether waste and scrap arising from repair and maintenance of plant and machinery installed in the cement factory would attract central excise duty, the Apex Court held that the process of repair and maintenance of the machinery of cement manufacturing plant in which the MS scrap and iron scrap arise, has no contribution or effect on the process of manufacturing of cement, that the welding electrodes, mild steel, cutting tools, MS angles, MS channels etc. used in the process of repair and maintenance of plant and machinery cannot be considered as raw material used in the process of manufacturing of cement, which is the end product and, therefore, the scrap of iron an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court in the case of J.K. Cotton Spg. & Wvg. Mills Co. Ltd. vs. Sales Tax Officer, Kanpur reported in 1997 (91) E.L.T. 34 (S.C.), while, interpreting the scope of the expression "in the manufacture of goods" in Section 8 (3).(b) of Sales Tax Act, 1956 held as under :- "8. Section 8(3)(b) authorises the Sales Tax Officer to specify, subject to any rules made by the Central Government, goods intended for use by the dealer in the manufacture or processing of goods for sale or in mining, or in the generation or distribution of electricity or any other form of power. By Rule 13 the Central Government has prescribed the goods referred to in Section 8(3)(b); such goods must be intended for use in the manufacture or processin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded as integrated processes and included "in the manufacture" of cloth. It would be difficult to regard goods used only in the process of weaving cloth and not goods used in the anterior processes as goods used in the manufacture of cloth. To read the expression "in the manufacture" of cloth in that restricted sense, would rise many anomalies. Raw cotton and machinery for weaving cotton and even vehicles for transporting raw and finished goods would qualify under Rule 13, but not spinning machinery, without which the business cannot be carried on. In our judgment, Rule 13 does not justify the importation of restrictions which are not clearly expressed, nor imperatively intended. Goods used as equipment, as tools, as stores, as spare parts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the ramming mass and dolomite mix used for preventing Corrosion of refractory lining of the furnace and sealing the crevices in the refractory walls so as to prevent leakage of molten metal are eligible for Modvat credit. Same view was taken Hon'ble Patna High Court in case of Collector vs. Tata Engg. & Locomotion Co. Ltd. reported in 1991 (111) E.L.T. 9 (PAT). Therefore, we are of the prima facie view that the items used for repair and maintenance of the plant and machinery would be eligible for Cenvat credit. While the items used for repair and maintenance of the plant and machinery cannot be considered as raw material, as held by the Apex Court in the case of Grasim Industries Ltd. vs. Union of India (supra) cited by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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