TMI Blog2008 (5) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise, Hyderabad - Respondent-M/s. Jai Raj Ispat Ltd. 2. The issue involved in both these appeals is one and the same, therefore, I am passing a common order. 3. Shri R. G. Utagikar, learned Consultant appeared for M/s. Vasavadatta Cements; Shri B. Kamala Vishnu, learned Consultant appeared for M/s. Jai Raj Ispat Ltd. and Shri K. Sambi Reddi, learned JDR and Smt. Sudha Koka, learned SDR represented the revenue. 4. I heard both sides. In both the impugned orders, it has been held that assessees are entitled to take Cenvat credit on Welding Electrodes as 'input'. Briefly stated the grounds of appeals of the revenue are as follows: (i) The Larger Bench in the case of Jaypee Rewa Plant v. CCE 2003 (159) ELT 553 (Trib.-Delhi) has held that welding electrodes used for repairs and maintenance of plants and machinery and not used co-extensively with the process of manufacture of final products and not integrally connected with the manufacture, therefore it cannot be considered to have been used in the manufacture of final products. Further, the following case laws in support of revenue's contentions have been relied on (a) Kanoria Sugar Gen. Mfg. Co. Ltd v. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows: "Welding Electrodes, oxygen gas, acetylene gas used for welding punctured pipes, carrying hot sugar juice during manufacture of sugar are eligible for credit as input as used in or in relation to the manufacture of final product." 5.4 The Hon'ble Bench relying on the earlier decisions of the Larger Bench in the case of Union Carbide India Ltd. v. CCE 1996 (86) ELT 613 (Trib.-Cal.), CC CE v. Modi Rubber Ltd. 2000 (119) ELT 197 (Trib.-New Delhi) (LB) has held that the decision in the case of Jaypee Rewa Plant (supra) also of the Larger Bench was not the correct law and have disagreed with the findings recorded therein and held that the credit on Electrodes; Acetylene Gas, Oxygen Gas etc. is eligible as these inputs were used in or in relation to the manufacture of final product directly or indirectly. 5.5 The Tribunal in the case of Prism Cement (sic) disallowed the credit on Electrodes based on the Larger Bench decision in the case of Jaypee Rewa Plant (supra). The appeal filed by M/s. Prism Cement has been admitted and it has been held that following questions of law arise for consideration: (A) Whether the Appellate Tribunal was correct in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of India Sugars Refineries Ltd (supra) and Maihar Cement's case (supra), I set aside the order of the Commissioner (Appeals) insofar as it allows the Modvat credit in respect of welding electrodes holding that the welding electrodes utilized for repairing machinery used for manufacture of finished goods are eligible for Modvat credit." While deciding this appeal, the Hon'ble Bench has relied upon the Rajasthan High Court's decision in the case of Neer Shri Cement Ltd. (supra) and also the decision of the Divisional Bench in the case of India Sugars Refineries Ltd. (supra). In the case of Neer Shri cement Ltd. (supra), the Hon'ble High Court of Rajasthan has held that-the credit on Electrodes is eligible. 5.8 In view of the above facts and the number of citations the credit availed on electrodes was proper and legal. The appellant has relied upon only few decisions which were given in different context. 6. Shri B. Kamala Vishnu, learned Consultant made the following submissions: (i) The expression used in the definition of inputs 'goods used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faulty the very basis of judicial institutions would get shaken, leading to utter chaos and confusion. Therefore, this Court is bound to follow the Larger Bench decision in preference to the decision of the Division Bench, which could not have declared a Larger Bench decision as overruled. Only a Bench larger than the said Larger Bench deciding Jaypee Rewa Plant (supra) could have declared that decision to have been either expressly or impliedly overruled by a decision of a higher forum, or itself overruled it. Therefore, none of the contentions raised on behalf of the appellant warrant any interference with the impugned order of the Commissioner (Appeals), which has rightly followed the decision of the Larger Bench in Jaypee Rewa Plant (supra), in disallowing the Cenvat credit to the appellants in respect of use of oxygen gas and acetylene gas. Both the appeals are, therefore, dismissed." 8. I have gone through the records of the case carefully. The main issue to be decided is whether the "Welding Electrodes" which are used for maintenance and repair of machineries in the cement plant and also in the rolling mill are entitled for Cenvat credit as 'input'. Both the lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order-in-Appeal No. 259/2000 (H-I) CE, dated 12-5-2000 passed in the appellant's own case has allowed the credit on the "Welding Electrodes". Since, no appeal has been filed against the Order-in-Appeal No. 259/2000 (H-I) CE, dated 12-5-2000, I am of the opinion that the same had attained finality. Even otherwise, the Cenvat credit of the duty paid on such Welding Electrodes is admissible to the appellants as Welding Electrodes qualify to the definition of 'capital goods' under rule 57AA(a)(ii) of Cenvat Credit Rules; Rule 2(b)(ii) of Cenvat Credit Rules, 2001/2002 and rule 2A(ii) of Cenvat Credit Rules, 2004 inasmuch as Welding Electrodes could be placed in the category of components or spares or accessories of the capital goods specified under rule 57AA(a)(i)/rule 2B(i) and rule 2(a)(i) of the aforesaid Rules. Further, the case had already been settled in the appellant's favour in the past and no new additional grounds or changes in law have been there which could have justified the reopening of the settled issue." 8.3 It can be seen that both the authorities have mainly considered the meaning of 'input' as given in the relevant Cenvat Credit Rules. They have arrived at their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;" 8.5 On a very careful reading of the definition of 'input' as given in the Rule, I find that all goods used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not is to be considered as 'inputs'. Of course it is understood that one should exclude the exclusions, if any, mentioned in the Rule. Further, even from the very definition of 'input', it is clear that the scope of the term is very wide to cover even the goods which are used indirectly in or in relation to the manufacture of final products. It is not necessary that the 'input' should be contained in the final product. This is also clear from the above definition. Even goods used as paint or packing materials or fuel for generation of electricity or steam used in or in relation to manufacture of final products are entitled for the Cenvat credit. 8.6 Coming to Welding Electrodes used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot normally done when the process of manufacture of goods with such machinery is under way and therefore are not part of or integrally connected with the process of manufacture of final product. It declined to apply the ratio of the decision of the Single Member Bench of the Tribunal in CCE v. Birla Jute Industries Ltd. 2001 (135) ELT 280 holding welding electrodes to be inputs under rule 57A, on the ground that it had not been shown that they were electrodes in that matter were used to maintain capital goods. 5. With greatest possible respect, I find myself unable to agree with the views expressed by this Bench. The sole ground for holding welding electrodes not to be capital goods is that welding electrodes used to repair or maintenance of the capital goods is that the repair and maintenance of plant is not done when the machinery is in operation, and such electrodes therefore cannot be considered to have been used in relation to the manufacture of the final product. Clause (b) of rule 57AA of the rules as it stood at the relevant time defined "inputs" to be all goods except high speed diesel and motor spirit used in or in relation to the manufacture of the final products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jaypee Rewa Plant's case (supra) had actually relied on another Larger Bench of the Tribunal in the case of Jawahar Mills Ltd's case (supra) which has also been confirmed by the Hon'ble Supreme Court. Can it be said that the Single Member Bench committed judicial indiscipline when it relied on another Larger Bench decision affirmed by Supreme Court? 8.9 Again a Single Member Bench of Shri C. Satapathy, Member (Technical) in the case of CCE v. Texchem Corpn. 2003 (157) ELT 715 (Trib.-Mum.) held that the Commissioner (Appeals) has power of remand even after the amendment in section 35A (3) of Central Excise Act, 1944 by Finance Act, 2001. The said decision disagreed with the decision of the Larger Bench of the Tribunal in the case of CCE v. Oripol Industries 2003 (155) ELT 278 (Trib.-New Delhi). Even while disagreeing with the Larger Bench, reliance was placed on the decision of the Apex Court in the case of Union of India v. Umesh Dhaimode 1998 (98) ELT 584. It was clearly held that Supreme Court's decision is binding on the Tribunal and is to be preferred to the contrary decision of Tribunal's Larger Bench decision in the case of Oripol Industries (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be binding in case if it has overlooked to look into the judgment of the High Court or Apex Court. Therefore, he submits that it would not be judicial indiscipline to disregard the Larger Bench judgment of Jaypee Rewa Plant and take a view that the activity of repair and maintenance is necessary and integral part of production of final goods in terms of Punjab Haryana High Court judgment rendered in the case of CCE v. National Fertilizer Ltd. 2002 (140) ELT 372 (Punj. Har.), which in turn relied on three Apex Court judgments.. . ."(p. 719) In other words, the India Sugars Refineries Ltd.'s case (supra) decision examined the issue in depth and relied on another Larger Bench decision in the case of Modi Rubber Ltd. (supra) and also decision of the Punj. Har. High Court in the case of CCE v. National Fertilizers Ltd. (supra) while coming to the conclusion that welding electrodes are entitled for Cenvat Credit. The Punjab and Haryana High Court's decision is definitely preferable to the Larger Bench decision in consonance with judicial discipline. In Para 5 of the India Sugars Refineries Ltd c case (supra), it has been clearly shown that the Larger Bench in the Jayp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r electricity is very necessary in the cement plant. Even, the use of inputs in generation of steam or electricity, which is used within the factory, would be an 'input' for the purposes of obtaining credit. Therefore, the term 'input' has very wide amplitude as interpreted by the Hon'ble Apex Court. In the light of these interpretations, the interpretation of Larger Bench in the Jaypee Rewa Plant's case (supra) appears to be highly restrictive. 8.14 The purpose of incorporating the words "in relation to the manufacture" is beautifully brought out in Paras 15 and 16 of the Three-Member Bench's decision in the case of Union Carbide India (supra). The said paragraphs are reproduced hereinbelow. The India Sugars Refineries Ltd.'s case (supra) of the Division Bench has relied on this decision: "15. We may also refer to the decision of High Court of Madras in Ponds ( India ) Ltd. v. Collector of Central Excise 1993 (63) ELT 3. The appellant, manufacturer of cosmetics, used duty paid plastic granules to manufacture plastic containers and used the same as containers for the excisable final product, namely, cosmetics. The Court held that the cosmetic items are not marketa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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