TaxTMI 
TaxTMI 
2010 (1) TMI 522
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.... and molasses classifiable under Chapter Heading No. 1701 and 1703 of the Central Excise Tariff Act, 1985. The appellants availed Cenvat credit to the tune of Rs. 22,075/- during the period May 2005 to August 2005 on the items namely welding electrodes classifiable under Heading 83.11, asbestos jointing sheets classifiable under sub-heading 68.05 and M.S. Plates as the capital goods. Disputing the claim of the appellants about entitlement to avail the Cenvat credit in relation to the welding electrodes and asbestos jointing sheets, a show cause notice dated 28-10-2005 came to be issued to the appellants requiring the appellants to show cause as to why the credit to the tune of Rs. 22,075/- in relation to the said items should not be disallowed and as to why the amount should not be recovered. The proceedings were contested by the appellants contending that the welding electrodes were the components and accessories of the capital goods as defined under Section 2(a)(A)(i) of the Cenvat Credit Rules, 2004 and were used for welding of various pipelines, equipments and machinery in the appellant's factory and were used in the process of replacing the worn out parts of the plant and mach....
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.... same was totally ignored by the authorities below. For the above reasons, according to the learned C.A. the authorities below erred in disallowing the cenvat credit availed by the appellants in relation to the said items. He further submitted that since there were divergent views expressed by the Tribunal on the entitlement of the assessee to avail the Cenvat credit in relation to the above items, the authorities below clearly erred in imposing penalty. Drawing my attention to the show cause notice, he further submitted that the same related to two items namely, welding electrodes and asbestos jointing sheets, however, the amount of credit which has been disallowed includes sum of Rs. 3,350/- in relation to MS Plates. There was specific ground raised by the appellants in the appeal before the Commissioner (Appeals) in that regard and that is clearly reflected from the impugned order itself and the Commissioner (Appeals) failed to give any finding in that regard. According to learned C.A. there was therefore, no justification to deny the credit to the tune of Rs. 3,350/-, which was availed by the appellants in relation to the M.S. Plates, that was not the subject matter at all. For....
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....e Tariff Act. Under item Nos. (iii) refers to components, spares and accessories of the goods specified at item No. (i) and (ii) of the said definition. It is with reference to this clause of the definition of the capital goods that the appellants claim welding electrodes to be the components and accessories of the goods specified at item No. (i) of the definition clause of the term "capital goods" under the said Rules. The Rules do not define the term components or accessories. In the absence of any definition of the said terms, it is permissible to refer to the dictionary meaning of the same. [Vide Commissioner of Customs, Excise, Delhi v. Allied Air-Conditioning Corpn. (Regd.) reported in 2006 (202) E.L.T. 209 (S.C.)]. The Webster Comprehensive Dictionary, International Edition defines the term components as "a constituent part" and as an adjective "serving or helping to constitute". It is defined in Concise Oxford Dictionary Ninth Edition, as a noun as "a part of a larger whole", and as an adjective as "being part of a larger whole". 7. The term "accessory" has been defined in Concise Oxford Dictionary Ninth Edition, as a noun as "an additional or extra thing, a small attachme....
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...., once the odd components are found to be worn out or are found not fit for use. Obviously, in the process, the welding electrodes loose their identity as well as existence and they can neither be components nor the accessories, bearing in mind, the context in which the items are understood as the capital goods within the meaning of the said expression under the said Rules. 10. In Hindustan Zinc Limited case, the Hon'ble Rajasthan High Court undoubtedly was dealing with the issue as to whether welding electrodes used for repairs and maintenance of the plant and machinery were eligible for Cenvat credit both as capital goods as well as inputs. The High Court referred to the decision of the Apex Court in Commissioner v. Jawahar Mills Ltd. - 2001 (132) E.L.T. 3 (S.C.), J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Officer - 1997 (91) E.L.T. 34 (S.C.) as also to the decision of the Tribunal in the matter of Jaypee Rewa Plant v. Commissioner - 2003 (159) E.L.T. 553 (Tribunal-LB) while answering the issue in favour of the assessee. 11. Referring to the decision of the Apex Court in Jawahar Mills case, it was held in Hindustan Zinc Limited case that the Apex Court has hel....
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....e need not be ingredients or commodities used in the processes, nor must they be directly and actually needed for "turning out or the creation of goods", it was observed that "the expression 'in manufacture of goods' should normally encompass the entire process carried on by the dealer, of converting raw materials into finished goods, where any particular process, or activity, is so integrally connected with the ultimate production of the goods, but for that process, manufacturing or processing of the goods would be commercially inexpedient, goods required in that process would, fall within expression "in the manufacture of goods". Obviously, it was on the aspect as to whether the product was used in or in relation to the manufacture of final goods. That is not the point in issue in the case in hand. Undisputedly, the welding electrodes are claimed to be the accessories of the welding machine. Welding machine does not form part of the manufacturing machinery. It may be used in the process of repairs of that machinery. It is not necessary to elaborately discuss this aspect. In this regard, suffice to refer to the decision of the Division Bench in the matter of M/s. Vikram Cement v. ....