Cenvat credit allowed for welding electrodes used in repair and maintenance of plant and machinery for cement manufacture

CESTAT (New Delhi - AT) allowed the appeal, holding that cenvat credit is admissible on welding electrodes used for repair and maintenance of plant and machinery when such inputs are used in the manufacture of final products (cement and clinker). The tribunal followed recent SC precedents that recognized cenvat credit for welding electrodes in repair and maintenance activities. The impugned order was set aside and the appellant granted entitlement to the claimed cenvat credit.

---

---

M/s. Nuvoco Vistas Corporation, manufacturer of cement and clinker, received welding electrodes for repair and maintenance of plant and machinery. A show cause notice alleged welding electrodes were not inputs and cenvat credit was inadmissible. The Asstt. Commissioner's order dropping the demand was appealed by Revenue; the appeal tribunal reversed and confirmed the demand. The present appeal invoked Apex Court decisions in M/s. Lafarge India Ltd. and The Kisan Cooperative Sugar Factory Ltd. (Civil Appeals dated 6 Dec. 2023), which held cenvat credit admissible on welding electrodes used in repair/maintenance. The tribunal quoted the Apex Court: "11. On consideration of sub-rule 4 of Rule 57-A of the Central Excise Rules, 1944, it is noted that the credit of specified duty is allowed in respect of two categories of inputs namely (i) inputs used in the manufacture of final products; and (ii) inputs used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The latter category is quite wide enough to incorporate the use of welding electrodes and gases in the instant case for the purpose of maintenance and up-keep, which is in relation to the manufacture of final products and which is indirect and is not contained in the final product as such. Further, the expression "in relation to" is of a wider import. Hence, the appellant is entitled to the benefit of MODVAT/CENVAT Credit for the period in question." Applying this precedent, the tribunal held the appellant entitled to cenvat credit on welding electrodes and set aside the impugned order.

---