Cenvat credit on welding electrodes used for plant maintenance was held admissible under the broad manufacture nexus test.

Cenvat credit on welding electrodes used for repair and maintenance of plant and machinery was treated as admissible because such goods were used in activities supporting manufacture and keeping the process commercially workable. The Tribunal relied on the broad interpretation of "used in or in relation to manufacture", which extends to maintenance inputs connected with production, and noted that the consistent High Court view supported eligibility. The contrary earlier view in the assessee's own matter had been stayed, so the disallowance of credit on these welding electrodes was not sustainable.

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Issues: Whether Cenvat credit was admissible on welding electrodes used for repair and maintenance of plant and machinery in the manufacture of final products.

Analysis: The disputed goods were used in repairing and maintaining the plant and machinery employed for manufacture. The Tribunal followed the binding and persuasive line of decisions holding that the expression used in or in relation to manufacture has a wide scope and includes goods used in an activity that keeps the manufacturing process commercially feasible. The Tribunal also noted that the contrary view taken in an earlier order in the same assessee's case had been stayed and that the consistent view of the High Courts favoured eligibility of credit on welding electrodes used for such maintenance activity.

Conclusion: Cenvat credit on welding electrodes used for repair and maintenance of plant and machinery was admissible, and the disallowance was not sustainable.

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