TMI Blog2014 (9) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... on have become fixed to the earth power plant, the same would not cease to be the "capital goods". If a process or activity is so integrally connected to the ultimate manufacture of goods so that without that process or activity, manufacture may, even if theoretically possible, be commercially inexpedient, the goods intended for use in such process or activity would be treated as used in the manufacture of goods. The expression used in Rule 2(k) of CCR, 2004 in the definition of "input" is "used in or in relation to the manufacture of final product whether directly or indirectly", whose scope is much wider than the scope of the expression "used in the manufacture". Therefore, in our view, any activity without which the manufacture of final product, though theoretically possible, is not commercially feasible, would have to be treated as having nexus with the manufacture of final product and the inputs used in such activity would be eligible for cenvat credit. impugned order is prima facie contrary to the provisions of the law and the appellant have a strong prima facie case in their favour and the requirement of pre-deposit under section 35F in these circumstances would cause un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2,34,07,480/- along with interest thereon under Section 11AB and imposed a penalty of ₹ 75 lakhs on the appellant under Rule 15 (1) of CCR, 2004. The cenvat credit demand confirmed against the appellant is 50% of the amount of ₹ 4,65,89,435/- demanded in the SCN, as cenvat credit of only ₹ 2,34,07,480/- had been availed by the appellant and the figure mentioned in the SCN had been wrongly reported by them. Against this order of the Commissioner, this appeal has been filed along with stay application. 4. Heard both sides in respect of the stay application. 5. Shri R. Parthasarathy, the learned consultant for the appellant, pleaded that cenvat credit, in question, has been availed on various items of components, parts and accessories which were used for replacing the old and worn-out components, parts and accessories of the machinery and as such these items have to be treated as items used for repair and maintenance of the plant; that the goods used for repair and maintenance of the plant are eligible for cenvat credit; that Tribunal in the case of Union of India Vs Hindustan Zinc Ltd. reported at 2007 (214) ELT 510 (Raj.) has held that MS/SS plates used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned goods have been used in the manufacture of immovable capital goods; that in view of the above submissions, the impugned order is not sustainable; that in any case, the goods used for maintenance are the parts, components and accessories of the machinery of the captive power plant and hence the same would be covered by the definition of 'capital goods' in Rule 2(a) of the Cenvat Credit Rules, 2004; that appellants have a strong prima facie case in their favour and hence the requirement of predeposit of the cenvat credit demand, interest thereon and penalty may be waived for hearing of the appeal and recovery thereof may be stayed during pendency of the appeal. 6. Shri P. Arul, Superintendent, Learned Departmental Representative opposed the stay application by reiterating the findings of the Commissioner and pleaded that Hon'ble Andhra Pradesh High Court in the case of Sree Rayalseema Hi-Strength Hypo Ltd. Vs CC CEX Tirupati reported at 2012 (278) ELT 167 (AP) has held that welding electrodes used for repair and maintenance of the plant and machinery do not qualify as input eligible for cenvat credit, as repair and maintenance is an activity distinct fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on goods used for the maintenance of the captive power plant works out to ₹ 4,65,89,435/- as detailed in the Annexure-I to this notice. Though the quantum of cenvat credit availed in respect of the disputed items is mentioned as ₹ 4,65,09,435/-, as explained by the Commissioner in para 17 and 20 of the impugned order, the actual cenvat credit availed is only 50% of this amount and it is this amount of demand which has been confirmed by the Commissioner. The department seeks to deny the above amount of cenvat credit in respect of the goods used for repair and maintenance of the power plant on the ground that power plant is fixed to earth structure which is not excisable and also the electricity generated is not excisable and hence any goods used for maintenance of the captive power plant would not be eligible for cenvat credit. 7.1 In our view, the ground on which the cenvat credit sought to be denied is totally incorrect. The definition of capital goods as mentioned in Rule 2(a) of the CCR 2004 covers the following goods, namely - (i) All goods falling under Chapter 82, Chapter 85, Chapter 90, Heading No.68.02, and sub-heading 6801.10 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l goods as mentioned above also covers components, spares and accessories of various items of capital goods irrespective of the tariff heading under which such components, parts and accessories fall. 9. Even if any other items have been used for maintenance and repair of the power plant, the cenvat credit would be admissible in respect of the same as input in view of the judgements of Hon'ble Chhattisgarh High Court in the case of Ambuja Cement Eastern Ltd. (supra), Hon'ble Rajasthan High Court in the case of Hindustan Zinc Ltd. reported at 2007 (214) ELT 510 (Raj.) as affirmed by the Apex Court vide judgement reported at 2007 (214) ELT A115 (SC) and of Hon'ble Karnataka High Court in the case of Alfred Herbert (India) Ltd. reported in 2010 (257) ELT 29 (Kar.) wherein it has been held that the goods used for repair and maintenance of plant and machinery are eligible for cenvat credit as inputs . Though Hon'ble Andhra Pradesh High Court in the case of Sree Rayalaseema Hi-strength Hypo Ltd. Vs CC CE Tirupati reported at 2012 (278) ELT 167 (A.P.) has taken a contrary view holding that repair and maintenance being an activity distinct from manufacture, welding el ..... 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