2021 (6) TMI 1106 - AT - Central Excise

Appellant wins Cenvat Credit case for welding electrodes pre-2011

The Tribunal ruled in favor of the appellant, allowing Cenvat Credit on welding electrodes for repair and maintenance activities even for the period ... CENVAT Credit - inputs - welding electrodes - period from April 2010 to December 2012 and from January 2013 to October 2013 - HELD THAT:- The issue stands decided in favour of the appellant as held by the Tribunal in the case of CCE, MEERUT VERSUS M/S. BAJAJ HINDUSTAN LTD. [2013 (11) TMI 943 - CESTAT NEW DELHI] where the issue pertaining to eligibility of welding electrode for repair and maintenance activity during the year 2008 (i.e. prior to amendment from 1st March, 2011) has been examined.The Tribunal while taking note of the decision in the case of M/S STEEL AUTHORITY OF INDIA LTD. VERSUS COMMR. OF CENTRAL EXCISE, JHARKHAND [2008 (7) TMI 16 - SC ORDER] took a view in favour of the assessee considering the decision of three High Courts wherein it has been held that credit is eligible on welding electrodes. It has also been observed therein that mere dismissal of SLP by the Supreme Court against the decision rendered by the Tribunal will not be considered to be law since not decided by the Apex Court. Since the issue is no longer res integra and the eligibility of Cenvat Credit on welding electrode has been squarely decided in favour of the assesse even for the period prior to 1st March, 2011, there is no reason to disallow credit in the present case. The demand of excise duty, interest and penalty is thus set aside. Appeal allowed - decided in favor of appellant. Issues: Disallowance of Cenvat Credit on welding electrodes as 'input' for repair and maintenance activities.Analysis:1. Issue of Disallowance of Cenvat Credit: The appellant, engaged in manufacturing iron and steel products, availed Cenvat Credit on welding electrodes for repair and maintenance activities. The dispute arose when the original authority disallowed the credit, stating that inputs used for repair and maintenance are not eligible for credit. Two Show Cause Notices were issued, covering different periods, to deny credit on welding electrodes. The Commissioner (Appeals) allowed credit post March 2011 amendment to the definition of 'input' but disallowed credit for the period prior to the amendment, citing that repair and maintenance activities are not in relation to manufacture. The Tribunal analyzed past judgments and held that the eligibility of welding electrodes for Cenvat credit has been established, even for the period before the 2011 amendment. The Tribunal emphasized that the dismissal of SLP by the Supreme Court against a Tribunal's decision does not establish a legal precedent.2. Legal Interpretation and Precedents: The Tribunal referred to judgments from three High Courts supporting the eligibility of welding electrodes for Cenvat credit in cases related to repair and maintenance activities. The Tribunal highlighted that the nexus between the activity and manufacturing process determines the eligibility of an item for Cenvat credit, regardless of whether the activity is directly part of the manufacturing process. The Tribunal concluded that the demand for excise duty, interest, and penalty was not sustainable, setting it aside based on established legal principles and precedents.3. Decision and Conclusion: The Tribunal ruled in favor of the appellant, allowing the appeal and dismissing the Revenue's appeal. The judgment emphasized that the issue of Cenvat Credit on welding electrodes had been decisively settled in favor of the assessee, even for the period preceding the 2011 amendment. Consequently, the demand for excise duty, interest, and penalty was overturned, and the appellant was granted consequential relief. The judgment was pronounced in open court on 16 June 2021, establishing a clear legal precedent for the eligibility of Cenvat Credit on welding electrodes for repair and maintenance activities in manufacturing processes.