TaxTMI 
TaxTMI 
2018 (7) TMI 169
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....er of cement and he has used welding electrodes in repairs and maintenance of the machinery and availed CENVAT Credit on the duty paid on the welding electrodes during the period May, 2013 to May, 2015. The department issued show cause notice seeking to deny this CENVAT credit on the ground that the welding electrodes were not used in or in relation to manufacture of final products and therefore, no credit is admissible as they do not qualify to be called as inputs under the CENVAT Credit Rules, 2004. The Learned lower authority confirmed the demands against which the appellant filed appeals before the Commissioner (Appeals) which were rejected. The present appeals are against this Orders-in-Appeal passed by the Learned First Appellate auth....
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....nce the credit is allowed, the question of fine and penalty do not arise. He further submits that in the event that no credit is allowed on the welding electrodes to them, at least fine and penalty should not be imposed because the issue is debatable and they are entitled to the benefit of doubt. 4. The Learned Departmental Representative vehemently opposed the arguments put forth by the Learned Counsel and pointed out that in the case of Sree Rayalaseema Hi-Strength Hypo Ltd [2012 (278) ELT 167 (AP)], the Hon'ble High Court of Andhra Pradesh which has jurisdiction over the present Bench has clearly and categorically denied the CENVAT credit on welding electrodes used for repairs and maintenance of plants and machinery, holding that they....
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.... regular repair and maintenance of the plant and machinery, by using welding electrodes." 6. Holding so, the Learned Single Member has allowed the credit on welding electrodes with consequential relief. 7. I have carefully considered the arguments on both sides, the relevant legal provisions at various points of time and other records of the case. It appears that the Government had been revising the CENVAT Rules from time to time expanding the scope of credit and also bringing about increasing harmony between the CENVAT Credit Rules and the erstwhile Service Tax Credit Rules and eventually merged them in 2004. The process of expansion of scope of CENVAT Credit continued even after 2004; simultaneously, the rates of Central Excise duti....
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.... of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service" 9. The case before the Hon'ble High Court of Andhra Pradesh was with respect to the Rule 2(k) of CENVAT Credit Rules, 2004 as above. Subsequently in 2011, Rule 2(k) was amended as follows: "(k) "input" means- (i) all goods used in the factory by the manufacturer of the final product; or (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warrant....
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....nufacture or not. The relevant period in the current cases is May, 2013 to May, 2015. Therefore, the definition of inputs under CENVAT Credit Rules, 2004 as amended in 2011 is relevant for the purpose. This definition, as may be seen, includes within inputs, "all goods used in the factory by the manufacturer of the final product" with some specified exceptions listed as A, B, C, D, E and F. Evidently, A to E do not cover the welding electrodes in question. 'F' refers to goods which have no relationship whatsoever with the manufacturer of final product. It is not in dispute that the welding electrodes are used for repair and maintenance of capital goods within the factory of manufacturer and these capital goods are used for manufacture of th....