Prospective amendment to input definition preserved Cenvat credit on steel items, oxygen gas and welding electrodes for earlier use.

Cenvat credit on steel structural items, oxygen gas and welding electrodes was treated as admissible for the relevant period because the disputed goods were used before the 07.07.2009 amendment and within the scope of input as understood with Explanation 2. The amendment introduced by Notification No. 16/2009-C.E. (N.T.) was applied prospectively, so it could not be used to deny credit for the earlier period. Credit on oxygen gas and welding electrodes used for repair and maintenance of plant and machinery was also recognised.

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Issues: Whether Cenvat credit on steel structural items, oxygen gas, and welding electrodes was admissible for the relevant period, and whether the amendment introducing Explanation 2 to the definition of input operated prospectively.

Analysis: The disputed goods were used during July 2008 to July 2009, and the steel items had been used before the amendment dated 07.07.2009. The definition of input, as interpreted with Explanation 2, covered goods used in the manufacture of capital goods used in the factory. The amendment introduced by Notification No. 16/2009-C.E. (N.T.) was held to be prospective and not available to deny credit for the earlier period. The same view had been followed in later Tribunal decisions, and credit on oxygen gas and welding electrodes used for repair and maintenance of plant and machinery had also been recognised.

Conclusion: The denial of Cenvat credit was unsustainable and the credit was admissible to the assessee.

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