2018 (11) TMI 73 - AT - Central Excise

Appellant wins Cenvat Credit appeal for welding electrodes in machinery repair

The appellant, engaged in manufacturing MS Tubes and Pipes, challenged the denial of Cenvat Credit on duty paid for welding electrodes used in machinery ... CENVAT Credit - welding electrodes used for repair and maintenance of the machinery - Held that:- Held that:- Tribunal in the case of Kisan Sahkari Chini Mills Ltd. vs. Commissioner of Central Excise, Meerut-II [2017 (1) TMI 1479 - CESTAT ALLAHABAD] laying down that welding electrodes used for joining of coils is an admissible cenvatable item - credit allowed. Valuation - includibility - whether the inspection and weighment charges recovered by the appellant from their customers would become a part of the assessable value or not? - Held that:- It is only in respect of supplies made to the Government Departments, who insist on further inspection of the goods that the said inspection is being undertaken and inspection charges are being recovered by the appellant from their customers on actual basis - Tribunal in the case of Classic Polytubes Pvt. Ltd. vs. Commissioner of C. EX., Lucknow [2016 (3) TMI 800 - CESTAT ALLAHABAD] has held that such inspection is not mandatory and is undertaken at the option of the buyers, the same would not be a part of the assessable value of the final product - demand set aside. Appeal allowed - decided in favor of appellant. Issues:1. Availment of Cenvat Credit on duty paid for welding electrodes used for machinery repair.2. Whether inspection and weighment charges recovered by the appellant become part of the assessable value.Analysis:1. The appellant, engaged in manufacturing MS Tubes and Pipes, disputed the availment of Cenvat Credit on duty paid for welding electrodes used in machinery repair. The Lower Authorities denied the appellant's legal grounds, confirming a demand of Rs. 10,55,267 along with interest and penalty. The Commissioner (Appeals) rejected the appeal due to a one-day delay in filing, but as the issues favored the appellant and the delay was minimal, the appeal proceeded without remand. Citing precedents, including the case of Kisan Sahkari Chini Mills Ltd. vs. Commissioner of Central Excise, it was established that welding electrodes for joining coils are admissible for Cenvat Credit. Consequently, the demand on this count was set aside.2. The second dispute concerned whether inspection and weighment charges, recovered by the appellant from customers, should be included in the assessable value. The appellant argued that these charges were for inspection by their quality testing unit and were already part of the final product's value. Notably, when inspection was optional for buyers, as per the case of Classic Polytubes Pvt. Ltd. vs. Commissioner of C. EX., Lucknow, such charges did not contribute to the assessable value. Following this decision, the Revenue's claim was found meritless, leading to setting aside the demand on this ground.In conclusion, the impugned order was set aside, and the appeal was allowed with consequential relief.