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2022 (10) TMI 921 - AT - Central ExciseRecovery of MODVAT Credit - procurement of welding electrode - recovery of the credit premised on the definition therein having excluded consumables, which the impugned goods were held to be, from the enumeration therein - whether welding electrodes are consumables as held by the original authority or are used in the manufacture of excisable goods and, therefore, eligible for MODVAT credit as claimed by the assessee? HELD THAT:- There is no doubt that welding electrodes deplete by usage but with the material in the electrodes transferred to the liner and the restoration renders it fit for continued production of cement. MODVAT credit is available on procurement of goods that are inputs with capital goods being entitled to the extent of conformity with Explanation of that expression in rule 57Q of Central Excise Rules, 1944. Doubtlessly, there is no mention of consumables in the said Explanation but neither is it certain that that consumables has little to do with manufacturing process for depriving eligibility for MODVAT credit - Absence of welding electrodes for deployment on liners, which are capital goods, impedes production and, therefore, its use is essential for production. Proceedings of the original authority, based on the finding that the impugned goods are consumables for the reasons stated therein, have ignored that the characteristics of consumables does not attach to welding electrodes, and, therefore, the consequential recovery of MODVAT credit in the impugned order is incorrect - Appeal allowed - decided in favor of appellant.
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