2019 (3) TMI 2085 - AT - Central Excise

Cenvatable inputs or not - Welding electrodes used for repair and maintenance in the assessee s factory - lower authorities have denied the benefit on the ground that repair and maintenance of the plant and machinery is not covered by the definition of manufacture and as such welding electrodes used for repair and maintenance could not be held to be Cenvatable - time limitation - HELD THAT - Tribunal s decision in the case of M/s DSM Sugar Vs Commissioner of Central Excise Meerut-II 2014 (1) TMI 1796 - CESTAT NEW DELHI took note of various decisions of Hon ble High Courts like M/s Ambuja Cements Eastern Ltd. Vs Commissioner 2010 (4) TMI 429 - CHHAITISGARH HIGH COURT Commissioner Vs Alfred Herbert (I) Ltd. 2010 (4) TMI 424 - KARNATAKA HIGH COURT and Hindustan Zinc Ltd. Vs Union of India 2008 (7) TMI 55 - RAJASTHAN HIGH COURT and held that such use of welding electrodes cannot be denied the benefit of Cenvat credit. Though the period involved in the present appeal is subsequent to 01.04.2011 when the definition of inputs underwent change but it is noted that even after the amendment the goods used in the manufacture of the final products are Cenvatable. Admittedly repair and maintenance of plant and machinery is one of the activities which are related to the manufacture of final product. Inasmuch as without the said activity the manufacturing process cannot be continued it has to be held that the welding electrodes used for repair and maintenance of plant and machinery are Cenvatable. Time Limitation - HELD THAT - Admittedly the credit was being availed by the appellant by reflecting the same in their Cenvat Account which fact was being reflected by them in their ER-1 return. In such a scenario no malafide can be attributed to the assessee in which case the longer period would not be available to the revenue. Accordingly the demand is held to be barred by limitation also. Conclusion - i) Post-amendment (after 01.04.2011) goods used in the manufacture of final products remain Cenvatable and repair and maintenance are integral to continuing the manufacturing process. ii) The demand was barred by limitation since the show cause notice was issued beyond the permissible period and no malafide was found as credit was regularly reflected in returns. Appeal allowed.

Summary

The Appellate Tribunal (CESTAT Allahabad), per Hon'ble Smt. Archana Wadhwa, addressed whether welding electrodes used for repair and maintenance in the assessee's factory qualify as "Cenvatable inputs." Despite lower authorities denying credit on the ground that repair and maintenance do not fall within the definition of manufacture, the Tribunal relied on precedents including M/s DSM Sugar v. Commissioner (2017 (346) ELT 407), Ambuja Cements Eastern Ltd. (2010 (256) ELT 690), Alfred Herbert (I) Ltd. (2010 (257) ELT 29), and Hindustan Zinc Ltd. (2008 (228) ELT 517), holding that such use is entitled to Cenvat credit. The Tribunal emphasized that post-amendment (after 01.04.2011), goods used in the manufacture of final products remain Cenvatable, and repair and maintenance are integral to continuing the manufacturing process. Additionally, the demand was barred by limitation since the show cause notice was issued beyond the permissible period, and no malafide was found as credit was regularly reflected in returns. Consequently, the impugned order was set aside, the appeal allowed, and the case disposed of with consequential relief.