TaxTMI 
TaxTMI 
2018 (3) TMI 1488
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....vat Rules in respect of its use in repair and maintenance of capital goods and also installation of new machines used in the factory for manufacture of excisable final products? 2 Whether in the facts and circumstances of the case credit of excise duty paid on welding electrodes is available to the appellant for its use in the installation of capital goods used in the factory for manufacture of excisable goods? 3 Whether in the facts and circumstances of the case when the issue involves an interpretation of a legal provision is penalty under the Cenvat Rules imposable? 4 Whether in the facts and circumstances of the case is establishment of mens rea on the part of the Appellant essential before any penalty can be imposed upon the Appellant under Rule 13 of the Cenvat Rules?" 2. Show cause notice dated 7th February 2005 was issued by the Assistant Commissioner of Central Excise, at Chandrapur to the appellant. By the said show cause notice, the appellant was called upon to show cause as to why cenvat credit duty amounting to Rs. 40,556/should not be disallowed and recovered from the appellant under Rule 12 of the Cenvat Credit Rules, 2002 read with section 11A of the Central Exc....
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.... Order in Original which were dismissed by the Commissioner (Appeals), Customs and Central Excise, Nagpur. Being aggrieved by the order of the Appellate Authority, an appeal was preferred by the appellant before the Appellate Tribunal which was dismissed by order dated 22nd August 2007 which is impugned in this appeal. The Appellate Tribunal referred to and relied upon the decision of its own Larger Bench in the case of Jaypee Rewa Plant v. CCE, Raipur 2003 (159) ELT 553 (LB). Relying upon the said decision, the Appellate Tribunal held that gases and electrodes which were used for repairs and maintenance of the plant and machinery cannot be considered to have been used in relation to manufacture of final products as they were not used coextensively with the process of manufacture of final products. It was held that the use of welding electrodes was not integrally connected with the process of manufacture. The Larger Bench of the Appellate Tribunal in case of Jaypee Rewa Plant (supra) rejected the contention that the expression, "in or in relation to the manufacture of goods" was wide enough to cover the welding electrodes and gases used for repairs and maintenance of the plant, mac....
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....f Central Excise, Bangalore 2006 (205) E.L.T. 717 in which the Appellate Tribunal has departed from the view taken in the case of Jaypee Rewa Plant (supra) by relying upon its earlier decision in the case of Commissioner of Customs & Central Excise, Meerut-I vs. Mody Rubber Limited (119) E.L.T. 197 and held that the welding electrodes used for repairs and maintenance of plant and machinery are eligible for cenvat credit both as capital goods as well inputs. He pointed out the decision of the Division Bench in the case of Rajasthan High Court in the case of Hindustan Zinc Ltd. vs. Union Of India 2008 (228) E..L.T. 517 (Raj.). He submitted that the decision of the Appellate Tribunal in the case of Jaypee Rewa Plant (supra) was disapproved by the Rajasthan High Court by holding that the Appellate Tribunal has not correctly read what the Supreme Court has held in the case of J.K.Cotton Spinning and Weaving Mills Co. Limited vs. Sales Tax Officer, Kanpur 1997 (91) E.L.T. 34 (S.C.). Reliance was accordingly placed on the decision of the Apex Court in the case of J.K.Cotton Spinning and Weaving Mills Co. Limited (Supra). He relied upon a decision of the Division Bench of Chhastisg....
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....s cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for any other purpose, within the factory production. Explanation 1 - The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2 - Inputs includes goods used in the manufacturer of capital goods which are further used in the factory of the manufacturer: 11 It is submitted that it is clear from the definition above that inputs includes oil goods, used in or in relation to the manufacturer of a final products whether directly or indirectly and whether or not the same is contained in final product. 12 It is submitted that although the said welding electrodes used for repairs and maintenance of machinery, do not fall within the definition of `capital goods' under Rule 2(b) of the Rules, they are nevertheless eligible for credit as `inputs' within the meaning of section 2(g) of the Rules. It is submitted that in or to be eligible for credit as inputs under Rule 2(g) of the Rules, the only requirement is that the said goods must have been used in or in relation to the manufacture of the final p....
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....ient quality for special treatment . This is to say that every category of goods "in connection with" manufacture of, or "in relation to" manufacture, or which facilitates the conduct of the business of manufacture will be included within Rule 13. Attention in this connection may be invited to a judgment of this Court in which it was held that vehicles used by a Company (which mined ore and turned out copper in carrying on activities as a miner and as a manufacturer) fell within Rule 13, even if the vehicles were used merely for removing ore from the mine to the factory, and finished goods from the factory to the place of storage. Spare parts and accessories required for the effective operation of those vehicles were also held to fall within Rule 13. See Indian Copper Corporation Ltd. v. Commr. of Commercial Taxes, Bihar, C.A.No.1021 of 1968, dated 19.10.1964." (underline added) 11. In the case of Jaypee Rewa Plant (supra), It was held that the welding electrodes which are used for carrying out repairs to the plant and machinery are not used coextensively for the purpose of the manufacture of final product. In the case of Hindustan Zinc Ltd. vs. Union Of India (supra), a Divisio....