CENVAT credit on repair materials upheld where steel items were used for maintenance of plant and machinery.

CENVAT credit was admissible on MS sheets, plates, angles, beams and similar goods used in the factory for repair and maintenance of plant and machinery, because such items were treated as falling within the capital goods framework when used as components, spares or accessories for repairs. The ruling in Rashtriya Ispat Nigam Ltd. on Rule 2(b) was distinguished from Sree Royalaseema Hi-Strength Hypo Ltd., which addressed the separate definition of inputs under Rule 2(k); the two decisions operated in different statutory fields. Support was also drawn from Hindustan Zinc Ltd., as affirmed by the Supreme Court, on credit for similar repair materials.

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Issues: Whether Cenvat credit was admissible on MS sheets, plates, angles, beams and similar items used in the factory for repair and maintenance of plant and machinery, and whether the jurisdictional High Court ruling governing capital goods was distinguishable from the decision dealing with inputs.

Analysis: The matter turned on the distinction between capital goods and inputs under the CENVAT Credit Rules, 2004. The jurisdictional High Court decision in Rashtriya Ispat Nigam Ltd. concerned Rule 2(b) and held that goods used in the factory as components, spares and accessories of capital goods used for repairs would fall within capital goods, whereas Sree Royalaseema Hi-Strength Hypo Ltd. dealt with Rule 2(k) and the definition of inputs. The two rulings operated in different statutory fields and the latter did not displace the former on the question of capital goods. The Tribunal also noted that the Rajasthan High Court decision in Hindustan Zinc Ltd., affirmed by the Supreme Court, supported admissibility of credit on similar materials used in repair and maintenance.

Conclusion: Cenvat credit was held admissible on the goods in question, and the Revenue's appeal was rejected.

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