TaxTMI 
TaxTMI 
2017 (3) TMI 1083
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. Heard the parties. 3. The brief facts are upon scrutiny of records by preventive branch of Division for the period January 2006 to August 2006, it appeared that appellant have availed inadmissible Cenvat credit amounting to Rs. 79,35,052/- on M.S. Flats, angles, bars, channels/ shapes & sections, H.R./C.R. strips/coils, welding electrodes paint, thinner, adhesive, flange beams etc. as inputs in construction/fabrication of structural supports, embedded to earth, Frame works, working platforms, etc. Such goods as per Revenue are neither inputs nor capital goods as defined in Rule 2 of CCR, 2004. Accordingly show cause notice dated 18.1.2007 was issued for recovery of Cenvat taken Rs. 5,14,031/-, along with interest & penalty was also proposed. 4. The appellant contested the show cause notice both on merits and limitation. However vide Order-in-Original dated 30.09.2011, Id. Commissioner adjudicated the show cause notice and confirmed the proposed demand with interest. Further penalty of equal amount was imposed under Rule 15(2) of CCR read with Section 11 AC of the Act. It was observed that items of Chapter Heading 72, 73 & 83 are not covered in the definition of Capital....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y. The Cenvat credit of Rs. 71,090/- was taken in respect of welding electrodes and credit of Rs. 99,342/- was taken in respect of steel items during the period from January 2009 to August 2009. The department being of the view that these items are not covered by the definition of input or capital goods, initiated proceedings for recovery of the Cenvat credit alongwith interest and imposition of penalty which resulted in issue of order-in-original dated 31/3/10 by which the Assistant Commissioner confirmed the above-mentioned Cenvat credit demand alongwith interest and imposed penalty of equal amount on the appellant. This order of the Assistant Commissioner was upheld by CCE (Appeals) vide order-in-appeal dated 22/10/10 except for reduction of penalty to Rs. 20,000/-. In this order, the Commissioner (Appeals) held that the welding electrodes used for repair and maintenance are not eligible for Cenvat credit either as inputs or as capital goods and in respect of steel items, while observing that these items were used for fabrication of various mill house machinery such as Cane Carrier side plate and Leveller/Chopper Hoods, Bagasse Cilo Pipe, Bagasse Carrier, Sulphur Furnace, Juice ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... E.L.T. 510 (Raj.) has held MS/SS plates used in the workshop for repair and maintenance are eligible for Cenvat credit and this civil appeal filed against this judgment of Hon'ble Rajasthan High Court has been dismissed by the Apex Court vide judgment reported in 2007 (214) E.L.T. A 115 (S.C.), that the steel items used for fabrication of various items of sugar mill machinery like Cane Carrier side plate and Leveller/Chopper Hoods, Bagasse Cilo Pipe, Bagasse Carrier etc. being sugar mill machinery and, hence, covered by Chapter 84, would be eligible for Cenvat credit as input, as the definition of input also covers the goods used for manufacture of capital goods used in the factory of the manufacture. He, therefor pleaded that the impugned order is not correct. 4. Shri R.K. Mishra the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and cited the judgment of Hon'ble Andhra Pradesh High Court in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. vs. CCE, Tirupati reported in 2012 (278) E.L.T. 167 (AP.), wherein it was held that welding electrodes used for repair and maintenance of the plant and machinery are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and expression in relation to used in Rule 57A has wide connotation. Therefore, for determining the eligibility of an item for Cenvat credit, what is relevant is as to whether the activity in which that item is required has nexus with manufacture or in other words without that item the manufacturing, though theoretically possible is not commercially feasible. Repair and maintenance, in my view is an activity without which though manufacturing activity may be theoretically possible the same would not be commercially feasible. The question as to whether repair and maintenance is an activity distinct and separate from manufacture has nothing to do with the question as to whether repair and maintenance has nexus with manufacture. Looked at from criteria prescribed by the Apex court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs. Sales tax Officer, Kanpur (supra), the activity of repair and maintenance has to be treated as having nexus with manufacture and hence any item used for repair and maintenance would be eligible for Cenvat credit. 7. As regards the use of the steel items, which according to the department, were used for fabrication of various items of plant....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this Court had earlier considered the case of the assessee in two similar cases of the previous assessment years in C.M.A. No. 1301 of 2005 dated 31.12.2012, where a reference was made to an order passed earlier in respect of the very same assessee. While dismissing the appeal filed by the Revenue, the Division Bench of this Court held as follows: "8. Even though learned standing counsel appearing for the Revenue submitted that the judgment in the assessee's own case reported in AIT-2011-358- HC (The Commissioner of Central Excise Vs. M/s India Cements Limited) had been appealed against, as of today, there are no details; in any event, the fact herein is that the Revenue does not controvert the facts found by the Assistant Commissioner that the impugned goods were used for fabrication of structurals to support various machines like crusher, kiln, hoppers, preheaters, conveyor system, etc. and that without these structural, the machinery could not be erected and would not function. 9. In the decision reported in AlT-2011-358-HC (The Commissioner of Central Excise Vs. M/s India Cements Limited), pointing out to Rule 57Q and the interpretation placed by the Apex Court in the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../d that the decision reported in 2011-TIOL-73-SC-CX (Saraswati Sugar Mills Vs. Commissioner of Central Excise, Delhi-III) dated 02.08.2011 is distinguishable on facts. This Court applied the principles laid down in the decision of Commissioner of Central Excise Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. (Supra) and held that the Tribunal was justified in allowing the assessee's contention in respect of the very same assessee. 15. Accordingly, following the principles laid down in Commissioner of Central Excise Jaipur Vs. Rajasthan Spinning & Weaving Mills Ltd. (Supra) and the earlier decisions of this Court in C.M.A. No.3101 of 2005 dated 13.12.2012 and C.M.A. No. 1265 of 2014 dated 10.7.2014, we are inclined to allow the appeal, thereby set aside the order of the Tribunal. Accordingly, this Civil Miscellaneous Appeal stands allowed. No costs. Consequently. M.P. No. 1 of 2011 is closed." 7. The Ld. A.R. for Revenue have placed reliance on the impugned order. He further relies on the ruling of Hon'ble Allahabad High Court in Daya Sugar Vs. CCE (2015) 316 ELT 394, wherein considering the allow-ability of Cenvat credit on chequered plates, packing plates, sheets, sec....