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2013 (11) TMI 981 - AT - Central ExciseEligibility for Cenvat credit of the welding electrodes used for repair and machinery of the plant and machinery – Following Hindustan Zinc Limited vs. Union of India [2008 (7) TMI 55 - HIGH COURT RAJASTHAN] and Ambuja Cements Eastern Ltd. vs. CCE, Raipur [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT] - Repair and maintenance is an activity without which manufacturing activity would not be commercially feasible even though theoretically it may be possible to carry out manufacturing activity without repair of plant and machinery. In J.K. Cotton Spg. & Weaving Mills Co. Ltd. vs. Sales Tax Officer, Kanpur [1964 (10) TMI 2 - SUPREME COURT OF INDIA] - while interpreting the scope of the expression used in the manufacture of in Section 8 (3) (b) of Central Sales Tax Act, 1956 has held that if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity, the manufacture may, even if theoretically possible, be commercially inexpedient, the goods intended in that process or activity would have to be treated as used in the manufacture - the scope of the expression used in or in relation to manufacture, whether directly or indirectly’ in the definition of ‘input’ in Rule 2 (k) of the Cenvat Credit Rules, 2004 would be much wider. The question as to whether repair and maintenance is an activity distinct and separate from manufacture has nothing to do with the question as to whether repair and maintenance has nexus with manufacture - the activity of repair and maintenance has to be treated as having nexus with manufacture and hence any item used for repair and maintenance would be eligible for Cenvat credit - Once it is accepted that steel items have been used for fabrication of various items of sugar mill machinery as mentioned passed by the Assistant Commissioner or their repair and maintenance, these steel items would have to be treated as input used in the manufacture of capital goods – thus, would be covered by the definition of input in Rule 2 (k) and would be eligible for Cenvat credit – Decided in favor of assessee.
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