2024 (7) TMI 1712 - AT - Central Excise

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 ... CENVAT Credit - welding electrodes - input or not - welding electrodes used for repair and maintenance of plant and machinery - activities not related to the manufacture of the final products - HELD THAT:- The submission of the learned counsel for the appellant is that the issue has been settled by the Apex Court in the case of M/s. Lafarge India Limited Vs. Commissioner of Central Excise, Raipur [2023 (12) TMI 1472 - SUPREME COURT] and also in the case of The Kisan Cooperative Sugar Factory Ltd. Vs. Commissioner of Central Excise, Meerut-I [2023 (12) TMI 1473 - SUPREME COURT], wherein it has been categorically held that the cenvat credit is admissible on welding electrodes used in the repair and maintenance activities. Revenue agrees to the submissions that the matter is squarely covered by the latest decision of the Apex Court - The appellant is entitle to cenvat credit on welding electrodes as inputs used in the manufacture of final products – cement and clinker. The impugned order, therefore, needs to be set aside and the appeal stands allowed. 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.