2018 (8) TMI 2001 - AT - Central Excise

CENVAT Credit - capital goods - appellant claimed credit on welding electrodes since the beginning of its factory - credit denied on the grounds that since the same were used for repair and maintenance the same were not eligible for credit as capital goods - HELD THAT - The issue is no more res-integra in view of judgment of the Hon ble High Court of Madras in the case of M/S. TAMILNADU NEWSPRINT PAPERS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE TRICHY 2012 (7) TMI 447 - CESTAT CHENNAI where it was held that The only way freeing export goods from domestic taxes can be ensured for the period relevant to these appeals is to allow credit of the service tax paid on the CHA and other services in respect of the export consignments so that the exporter would be compensated either by utilization of such credit for payment of other taxes or by taking refund when such utilization is not possible. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availability of CENVAT credit on welding electrodes used for repair and maintenance of capital goods.

Analysis:

Issue 1: Availability of CENVAT credit on welding electrodes for repair and maintenance of capital goods

The case involved appeals arising from a common order-in-appeal concerning the eligibility of CENVAT credit on welding electrodes used for repairing capital goods in a factory. The appellant claimed credit on welding electrodes for repair and maintenance activities on capital goods, which were objected to in three Show Cause Notices. The adjudicating authority confirmed the demand for recovery under Cenvat Credit Rules, 2004 and imposed penalties. On appeal, the Ld. Commissioner (Appeals) modified the order by setting aside the penalty. The central issue was whether the CENVAT Credit of welding electrodes used for repair and maintenance of capital goods, specifically plant and machinery, was available to the assessee.

The Ld. Advocate for the appellant argued that welding electrodes were essential for repairing and maintaining capital goods, citing relevant judgments. The Ld. D. R. reiterated the lower authorities' orders. The Tribunal examined the issue in light of a judgment by the Hon'ble High Court of Madras in a similar case. The Tribunal noted that the issue was no longer res-integra based on the mentioned judgment, which clarified the admissibility of CENVAT credit on welding electrodes. The Tribunal referred to specific questions of law framed by the High Court, emphasizing the importance of the admissibility of such credit.

In line with the judgment cited, the Tribunal concluded that the facts of the present case aligned with the precedent set by the High Court. Consequently, the impugned orders were set aside, and the appeals filed by the appellant were allowed. The Tribunal's decision was based on the clear interpretation of the law and the application of relevant precedents, ensuring the availability of CENVAT credit on welding electrodes for repair and maintenance activities on capital goods.

This comprehensive analysis of the judgment highlights the legal intricacies involved in determining the availability of CENVAT credit on welding electrodes for repair and maintenance of capital goods, showcasing the application of legal principles and precedents in reaching a just decision.