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TMI Blog2018 (3) TMI 1488X X X X Extracts X X X X X X X X Extracts X X X X ..... ted [2010 (11) TMI 34 - SUPREME COURT OF INDIA], it cannot be said that the law which prevails today should not be followed. The Appellate Tribunal has not denied relief to the appellant on the ground that the definition of inputs is restricted only six categories mentioned therein. Appeal allowed in part. - Central Excise Appeal No.89 of 2008, With Central Excise Appeal No. 99 of 2008 and Central Excise Appeal No. 227 of 2008 - - - Dated:- 28-3-2018 - A.S. OKA, A.K. MENON, JJ. Mr. Anupam Survey a/w Mr.Priyanka Pol and Mr.Pratik Divakar i/b Little and Company for the appellant Ms. P.S. Cardozo for the respondent JUDGMENT : (PER A.S.OKA,J.) 1. These appeals can be conveniently disposed of by a common Judgment as the issue which arises in these appeals is more or less same. So far as CEXA No.89 of 2008 is concerned, it takes exception to the Judgment and Order dated 22nd August 2007 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (for short the Appellate Tribunal ). The appeal was admitted by the order dated 13th August 2008 on the following substantial questions of law: 1 Whether in the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are consumed in the work of fixing of machinery and also the same are used for maintenance for the capital goods. In fact, the said welding electrodes are an integral part of the manufacturing process and can be said to have been utilized in or in relation to manufacture of the final product. It was also contended that when the electrodes are used for installation/fixing of machinery or are used as accessories, credit is available. It was contended that no penalty and interest was payable. Similar notices have been issued by the Assistant Commissioner on 22nd February 2005 and 10th March 2005 making similar allegations for a different period. The amounts involved in the said notices were ₹ 61,730/and ₹ 2,06,803/respectively. Similar reply was issued by the appellant to the said notices. 3. The show cause notices were decided by the Order in Original passed by the Assistant Commissioner of Central Excise, Chandrapur by order dated 28th July 2005. He disallowed the CENVAT credit of ₹ 3,09,089/subject matter of three notices. He imposed penalty of ₹ 78,000/on the appellant in exercise of power under Rule 13 of the said Rules of 2002. He also directed payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 and penalty of ₹ 1,75,000/was imposed in exercise of power under Rule 15 of Cenvat Credit Rules,2004 (for short the said Rules of 2004 ). Interest on the aforesaid amount was also made payable in accordance with Rule 14 of the said Rules of 2004. An Appeal preferred by the appellant was dismissed by the Commissioner (Appeals), Central Excise, Nagpur. By the impugned Judgment and order dated 20th November 2007, the Appellate Tribunal dismissed the appeal preferred by the appellant by relying upon decision of its own Larger Bench in the case of Jaypee Rewa Plant (supra). 5. The Appeal No.227 of 2008 arises out of a similar show cause notice wherein it is alleged that credit in the sum of ₹ 2,81,565/was illegally taken on welding electrodes. The demand made on the basis of the show cause notice was confirmed by the Assistant Commissioner. He imposed penalty of ₹ 75,000/on the basis of Rule 15 of the said Rules of 2004. Interest was also ordered to be paid. The said demand has been confirmed upto the Appellate Tribunal. 6. The learned counsel for the appellant in support of the Appeal Nos.88 and 89 of 2008 submitted that the Appellate Tribunal has only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit and the period for which it was taken differ. We have perused the relevant decisions relied upon by the parties. The stand taken throughout by the Appellant right from the reply to the show cause notices is very consistent. For that purpose, we must quote paragraphs 8 to 12 of the reply to one of the notices forming subject matter of Appeal No.89 of 2008 which read thus: 8 It is submitted that the show cause notice under reply proceeds on an erroneous assumption that we had availed credit of duty paid on Welding Electrodes as Capital goods. This is factually incorrect. 9 It is submitted that the said welding electrodes are consumed in the process of installation fixing of the Machinery and also for the maintenance of the capital goods used by us. As such, the said welding electrodes are an integral part of the manufacturing process and can be said to have been utilised in or in relation to the manufacture of the final product. Also they used for fixing/installation of the machinery for the manufacturing of the Final Product. 10 It is submitted that the Cenvat Credit Rules 2002 define inputs as under: (g) input means all goods, expect high speed diesel oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern, raw cotton undergoes various processes before cloth is finally turned out. Cotton is cleaned, carded, spun into yarn, then cloth is woven, put on rolls, dyed, calendered and pressed. All these processes would be regarded 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, or as accessories in the manufacture or processing of goods, in mining, and in the generation and distribution of power need not, to qualify for special treatment under section 8(1), be ingredients or commodities used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the case of Jaypee Rewa Plant (supra) is not a good law. 12. Now, coming back to the impugned order, the Appellate Tribunal has proceeded on the footing that the decision of its Larger Bench in the case of Jaypee Rewa Plant (supra). After having perused the decision of the Apex Court in the case J.K. Cotton Spinning and Weaving Mills Co. Limited (supra), We agree with the view expressed by Rajasthan and Chhatisgarh High Courts that the said decision of the Larger Bench of the Appellate Tribunal in the case of Jaypee Rewa Plant is based on incorrect reading of the law laid down by the Apex Court in the said decision. 13. Therefore, the test laid down by the Apex Court in the case of J.K. Cotton Spinning and Weaving Mills Co. Limited (supra) will have to be applied to the present case. The Appellate Tribunal ought to have applied its mind to the question whether the welding electrodes were used by the Appellant directly or indirectly in the manufacture of final products or in relation to manufacture of final products. The expression in the manufacture of final products should normally encompass the entire process carried on of converting raw material into f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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