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Issues: (i) Whether welding electrodes used in the manufacture of pre-fabricated structures were raw material and eligible for input tax credit; (ii) Whether the amending law of 2008 operated prospectively and was inapplicable to Assessment Year 2006-07.
Issue (i): Whether welding electrodes used in the manufacture of pre-fabricated structures were raw material and eligible for input tax credit.
Analysis: The materials were used in gas and electric welding, which formed an integral part of the manufacturing process of pre-fabricated structures. Even though the electrodes lost their character in the finished product, they were essential for manufacture and were not mere consumables. On that basis, they qualified as raw material for the purpose of input tax credit.
Conclusion: The denial of input tax credit on welding electrodes was unsustainable and was in favour of the assessee.
Issue (ii): Whether the amending law of 2008 operated prospectively and was inapplicable to Assessment Year 2006-07.
Analysis: The Tribunal had treated the amendment as prospective. The revision was allowed on the footing that the amendment could not govern the assessment year in question, and the benefit claimed by the assessee could not be denied by applying the amendment retrospectively.
Conclusion: The amending law of 2008 was held to be prospective and not applicable to Assessment Year 2006-07, in favour of the assessee.
Final Conclusion: The revision succeeded, the assessment and appellate orders were set aside, and the matter was remitted for fresh re-assessment after granting input tax credit.
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