TMI Blog2022 (10) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... DVAT credit is available on procurement of goods that are inputs with capital goods being entitled to the extent of conformity with Explanation of that expression in rule 57Q of Central Excise Rules, 1944. Doubtlessly, there is no mention of consumables in the said Explanation but neither is it certain that that consumables has little to do with manufacturing process for depriving eligibility for MODVAT credit - Absence of welding electrodes for deployment on liners, which are capital goods, impedes production and, therefore, its use is essential for production. Proceedings of the original authority, based on the finding that the impugned goods are consumables for the reasons stated therein, have ignored that the characteristics of consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutinized the usage of the welding electrodes in the factory and, placing reliance on circular no. 267/11/2010-CX dated 8th July 2010 of the Central Board of Excise and Customs (CBEC) which directed that credit shall not be admissible on input used for repair and maintenance of capital goods , concluded by ordering recovery of the credit wrongly taken. It is also pointed out by Learned Authorised Representative that the definition of capital goods in rule 57Q of Central Excise Rules, 1944 makes it abundantly clear that welding electrodes , which erode upon usage, were not intended to be such within the scheme of credit. 3. According to Revenue, the decision of the Tribunal in Kesar Enterprises Ltd v. Commissioner of Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the manufacture of excisable goods and, therefore, eligible for MODVAT credit as claimed by the assessee. The legal position is abundantly clear as, in the Explanation in rule 57Q, it is enumerated that (1) capital goods means - (a) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weighbridges used in the factory of the manufacturer. It is the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame issue arose for consideration of Chhattisgarh High Court in the case of Ambuja Cement (supra). Ultimately it was held that the decision in the case of Jaypee Rewa Plant (supra) is not a good law. 12. Now, coming back to the impugned order, the Appellate Tribunal has proceeded on the footing that the decision of its Larger Bench in the case of Jaypee Rewa Plant (supra). After having perused the decision of the Apex Court in the case J.K. Cotton Spinning and Weaving Mills Co. Limited (supra), we agree with the view expressed by Rajasthan and Chhattisgarh High Courts that the said decision of the Larger Bench of the Appellate Tribunal in the case of Jaypee Rewa Plant is based on incorrect reading of the law laid down by the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that of depletion without transfer to the goods deployed for manufacture but there are a few, such as welding electrodes , which, upon such consumption, enhances the capital goods which are, undoubtedly, eligible for credit. Absence of welding electrodes for deployment on liners , which are capital goods , impedes production and, therefore, its use is essential for production. 8. Proceedings of the original authority, based on the finding that the impugned goods are consumables for the reasons stated therein, have ignored that the characteristics of consumables does not attach to welding electrodes , and, therefore, the consequential recovery of MODVAT credit in the impugned order is incorrect. Accordingly, appeal is allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
