TMI Blog2017 (6) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... rcially inexpedient, the goods intended in that process or activity, would have to be treated as used in the manufacture. When the Apex Court has interpreted the expression 'used in the manufacture' in the above manner, the scope of the expression 'used in or in relation to manufacture,' 'whether directly or indirectly' in the definition of input in Rule 2 (k) of the Cenvat Credit Rules, 2004 would be much wider. So far the utilization of items like M.S. Plates, are concerned, it is admitted fact that such items have either been used in repair and maintenance or for fabrication of various capital items or machinery of the sugar mill and, therefore, the same would be eligible for Cenvat credit - That the steel items used for fabrication of various items of Sugar Mill Machinery like cane, Bagasse carrier, Bagasse Cilo, pipe, etc., being sugar mill machinery and hence are covered by chapter 84, would be eligible for Cenvat credit as inputs and the definition of input also cover the goods used for manufacturing of capital goods used in the factory of manufacturer of dutiable goods. As the steel items have admittedly been used for fabrication of various items of plant and machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems/inputs were used in manufacture of various capital goods like Syrup Treatment Plant, Control Unit, Filter Clarification System, etc. and whether the exclusions provided in Explanation-2 of Rule 2 (k) of Cenvat Credit Rules, 2004, inserted with effect from 07/07/2009 have prospective effect only, and whether the demand is barred by limitation 3. The brief facts as per SCN in Appeal No.E/55620/2013 are: 3.1 Whereas, on scrutiny of the records of the party for the period January' 07 to Dec' 10, submitted by the party vide ref. No.BHL-KDK/CIT/2011-12 dated 15.09.2011, it was found that during this period the party availed Cenvat Credit amounting to ₹ 1,92,30,572/- on the items such as Shape Section, Angles, M.S. Plates, M S Round, Beams, Rails M. S. Flats, Channels, Hot strips, H R Plates, M. S. Flat, M. S. Square, H R Coils, Aluminium Sheets, R. S. Joist etc. falling under chapters 72, 73 76 of the Central Excise Tariff Act, 1985 as inputs (details enclosed as Annexure-A ). These inputs were used in the manufacture of goods i.e. Syrup Treatment Plant, Control Unit, Filter Clarification System and Structural Support for Machinery Houses such as mill ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken as input on W. Electrodes of Ch. 83 - ₹ 4,23,976.00 c) Credit taken as input on the items of Ch. 72/76 - ₹ 2,75,73,623.00. Whereas the Galvanised Iron Corrugated Sheets, an item classifiable under Chapter- 72, has been claimed by the party of Chapter 84 which deals with the goods like Nuclear Reactors, Boilers, Machinery Mechanical appliances and parts thereof. It appears that the party have deliberately mis-stated this fact to take the benefit of Cenvat credit on this item as Capital goods. Thus the amount involved ₹ 78,996.00 in this regard appears inadmissible for the purpose of taking Cenvat credit. Whereas the Cenvat Credit taken on W. Electrodes (Ch. 83) as input also do not appear proper as these items cannot be termed as input in light of the definition provided under Rule 2(k) of the Cenvat Credit Rules, 2004. Further the party's claim in their reply under Ref. No.BHSIL/CIT/2010, dated 01.10.2010 that these goods had been used as input in the manufacture of various Capital goods like Storage Tanks, Vacuum Pipes, Cane Unloader etc. and thus are covered under the Explanation - 2 to Rule 2(k), is not acceptable as they could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate dated 10.05.2012, in Appeal No.E/56167/2013-EX[DB] (on page No.251 to 302) has also certified the use of steel items for fabrication of plant machinery, necessary support for plant machinery, the details of such plant machinery is also given. Similarly, the chartered Engineer vide his certificate dated 09/05/2012 in Appeal No.E/55620/2013-EX[DB] (at page no.152 to 184), have certified that various steel items have been used for fabrication of plant machinery and also for necessary support for such plant machinery. 8. The learned A. R. for revenue have relied on the impugned order. 9. Having considered the rival contentions we find as follows: - 9.1. So far as eligibility for Cenvat credit of the welding electrodes used for repair of the plant and machinery is concerned, this issue stands decided by the judgment of three High Courts, - judgment of Hon'ble Rajasthan High Court in the case of Hindustan Zinc Limited Vs. Union of India, judgment of Hon'ble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. Vs. CCD, Raipur and judgment of Hon'ble Karnataka High Court in the case of CCE, Bangalore Vs. Alfred Herbert (India) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate from manufacture has nothing to do with the question as to whether repair and maintenance has nexus with manufacture. Looking at from criteria prescribed by the Apex court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. Vs. Sales tax Officer, Kanpur (supra), the activity of repair and maintenance has Lo be treated as having nexus with manufacture and hence any item used for repair and maintenance would be eligible for Cenvat credit. Further, usage of Iron Steel items required for construction of structural supports for plant machinery is concerned, the said issue is covered in favour of the manufacturer-assessee in the case of India Cements Ltd of Hon ble Madras High Court, reported at AIT-2011-358-HC and also in the case of Hindustan Zinc Ltd Vs Union of India reported at 2007 (217) ELT 510 (Raj) by Hon'ble Rajasthan High Court. The Hon'ble Supreme Court had affirmed the judgment of Hon'ble Rajasthan High Court reported at 2007 (214) ELT A 115 (SC), wherein it was held that although repair and maintenance is an activity without which manufacturing activity would not be commercially feasible, even though critically, it may be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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