TMI Blog2010 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... e for credit as "inputs" under the CENVAT Credit Rules, 2002 (for short "the 2002 Rules"). 2. In view of the order we propose to make in all these appeals, at this stage, we deem it unnecessary to narrate the facts in each of the tagged appeals. However, in order to comprehend the controversy in these appeals, a brief reference to the facts in Civil Appeal No.3976 of 2007 would suffice: The appellant viz. Ramala Sahkari Chini Mills, (hereinafter referred to as "the assessee") engaged in the manufacture of V.P. sugar and molasses, availed of CENVAT credit on welding electrodes, falling under sub-heading 8311.00 of the Central Excise Tariff Act, 1985 (for short "the Tariff Act"), under Rule 2 of the 2002 Rules. The Range Superintendent, vide his letter dated 21st November, 2002 asked the assessee to furnish details of use of welding electrodes in their factory. The assessee replied to the said letter on 28th November, 2002 stating that the said goods are used in the maintenance of their plants and machinery. 3. Thereafter, three show cause notices dated 4th October 2002, 3rd April 2003 and 7th July 2003 were issued to the assessee for the periods February 2002, March 2002 to Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit either as capital goods or as inputs. 5. As regards the issue of penalty, it was contended by the learned counsel for the appellant that there was conflict amongst the judicial pronouncements on the issue and, therefore, no intention to evade duty could be inferred. Considering the issue of penalty, the Commissioner (Appeals) has held that the appellant was aware that Cenvat credit on the said item was not available and despite that they availed credit to evade payment of duty. In fact, the appellant did not respond to the letters of the Superintendent sent on 5.04.2002, requiring them to reverse the credit as it was not admissible. The appellant cannot rely upon a self- created uncertainty when the provisions of law were (sic) clear and by the decision of the Tribunal rendered as far as back in 1996 in CCE, Belgaum Vs. Panyam Cements Mineral Inds ., it was held that welding electrodes used for maintenance of machines were (sic) not eligible for Modvat credit. The authorities below have made the impugned orders imposing penalty and directing interest to be recovered for valid reasons, warranting no interference by this Court. The appeal, is, therefore, dismissed." 7. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the statutory definition of the word "input" in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word "input" can be divided into three parts, namely: (i) specific part (ii) inclusive part (iii) place of use Coming to the specific part, one finds that the word "input" is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, is that all goods "used in or in relation to the manufacture" of final products qualify as "input". This presupposes that the element of "manufacture" must be present............................................................ ........................................................................... ........ 34. In the past, there was a controversy as to what is the meaning of the word "input", conceptually. It was argued by the Department in a number of cases that if the identity of the input is not contained in the final product then such an item would not qualify as input. In order to get over t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of final product". Similarly, we are of the view that consideration such as input being used as packing material, input used as fuel, input used for generation of electricity or steam, input used as an accessory and input used as paint are per se also not relevant. All these considerations become relevant only when they are read with the expression "used in or in relation to the manufacture of final product" in the substantive/specific part of the definition. 38. In each case it has to be established that inputs mentioned in the inclusive part are "used in or in relation to the manufacture of final product". It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression "used in or in relation to the manufacture" has many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Coffee Works of P.F.X. Saldanha and Sons Anr . (1991) 3 SCC 617, another three judge Bench of this Court had observed that: "The amendment is in the nature of expansion of the original definition as it is clear from the use of the words "include a factory". The amendment does not restrict the original definition of "seasonal factory" but makes addition thereto by inclusion. The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word `include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include." 15. Therefore, it is trite that generally the word "include" should be given a wide interpretation as by employing the said word, the legislature intends to bring in, by legal fiction, something within the accepted connotation of the substantiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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