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2015 (5) TMI 569 - HC - Central ExciseDisallowance of CENVAT Credit - Capital Goods - Welding electrodes - Whether 'welding electrodes' can be treated to be 'capital goods' under Rule 57Q for the purpose of allowing MODVAT/CENVAT Credit thereon to the appellant assessee during the period of August 1999 to September, 1999 - Held that:- The scheme was introduced by inserting Chapter AA containing Rules 57A to 57J. Initially MODVAT scheme was introduced with a view to avail credit on duty paid on exisable goods used as 'input' in manufacture of final products. From 1st March, 1987, similar scheme for allowing credit of money in respect of certain raw materials used in manufacture of certain exisable goods was introduced and Chapter AAA having Rules 57K to 57P was inserted. Scheme was further enlarged by inserting Chapter AAAA with Rules 57Q to 57U w.e.f. 01.03.1994 so as to permit availment of credit on duty paid on 'capital goods' which are used in manufacturing process. - credit admissible on 'capital goods' and therefore, we are confining ourselves with the relevant provisions contained in Rule 57Q to 57U, as stood in 1999. As per own admission of appellant, these 'Electrodes' are used for welding of machines and machine parts which form part of repair work. If there is no damage in machine or no welding is required, "Welding Electrodes" would not be used at all. Meaning thereby, it fails the test of being a constituent of machine etc. or the manufacturing process of finished goods. It thus cannot be said that "Welding Electrodes" form constituent of plant and machinery. One user mentioned is hardening of surface of mill rollers, trash plates, scrappers so that smooth crushing of cane can be carried out. Meaning thereby, that though machines are otherwise workable for the purpose of manufacture of sugar, for smooth functioning, "Welding Electrodes" are used to form a layer over the surface of mill rollers etc. to harden it. It does not mean that without user of 'Electrodes', the machines are unworkable. "Welding Electrodes" do not constitute an integral part necessary to the constitution of whole article and without which, article would not be complete, as observed by Apex Court in paragraph no. 13 of the judgment in Saraswati Sugar Mills (2011 (8) TMI 4 - SUPREME COURT OF INDIA ). Consequently, we are of the view that present matter is squarely covered by what has been said by the Court in Saraswati Sugar Mills (Supra) and applying observation and test laid down therein it cannot be said that "Welding Electrodes" satisfy the requirement so as to constitute 'component' of items mentioned in column nos. 1 to 4 of table in Rule 57Q(1) of Rules, 1944. - Decided against assessee.
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