At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad
By, THE HONORABLE JUSTICE: DR. D.M. MISRA
For Respondents: L. Patra, A.R.
1. None appeared for the appellant. Heard Ld. AR for the Revenue.
2. This is an appeal filed against order-in-appeal No. AHM-EXCUS-001-APP-034-2015-16 dated 26.11.2015 passed by Commissioner(Appeals) Ahmedabad.
3. Briefly stated the facts of the case are that the appellant had availed CENVAT credit of duty paid on MS Channels, MS Plate, MS Angle etc. used the same for repair and maintenance of the capital goods installed in the factory. Alleging that these items are not eligible
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to credit, Show Cause Notice was issued to them for recovery of Rs. 6,744/- for the period December 2009 to October 2010. On adjudication, the demand was confirmed and equal amount of penalty was imposed on the appellant. On appeal, the Ld. Commissioner (Appeals) upheld the order of the Adjudicating Authority and rejected their appeal. Hence, the present appeal.
4. I find that the dispute centres around the eligibility of CENVAT credit on the disputed items used within the factory for repair and maintenance of the capital goods as per the definition of input as prescribed under Rule 2(k) of CCR, 2004. This issue has been considered in the judgments of the cases of Kisan Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Lucknow : 2013 (292) ELT 394 (Tri.-Del.), Commissioner of Central Excise, Customs & Service tax, Visakhapatanam-I vs. Jindal Stainless Ltd : 2016 (343) ELT 527 (Tri.-Bang.) and Sarjoo Sahkari Chini Mills Ltd. Vs. Commissioner of Central Excise, Lucknow : 2009 (248) ELT 559 (Tri.-Del.). This Tribunal in Kissan Sahakari Chini Mills Ltd.'s case (supra) after analysing the principle of law observed as follows:
5. I have considered submissions from both the sides and perused the records. I find that the issue as to whether the goods used for repair and maintenance of plant and machinery are eligible for cenvat credit, stands decided in favour of the Appellant by Hon'ble Rajasthan High Court in the case of Hindustan Zinc Ltd. (supra) wherein Hon'ble High Court has held that MS/SS plates used in the workshop meant for repair and maintenance of the plant and machinery's would be liable for cenvat credit and also by the judgments of Hon'ble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. v. Commissioner of Central Excise (supra) and Hon'ble Karnataka High Court in the case of Commissioner of Central Excise v. Alfred Herbert (India) Ltd. (supra) wherein Hon'ble High Court have held that the inputs used for repair and maintenance of plant and machinery would be eligible for cenvat credit. The learned departmental representative has cited a contrary judgment of Hon'ble High Court of Andhra Pradesh, in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. v. Commissioner of Customs & Central Excise, Tirupati reported in : 2012 (278) E.L.T. 167. Since three High Courts as mentioned above, have held that the inputs used for repair and maintenance of plant and machinery are eligible for cenvat credit, I am of the view that it is these judgments which have to be followed.
5.1 The Apex Court in the case of J.K. Cotton SPG & WVG Mills Co. Ltd. v. Sales Tax Office reported in : 1997 (91) E.L.T. 534 (S.C.), interpreting the scope of the expression - in the manufacture of goods in Section 8(3)(C) of the Central Sales Tax Act, 1956 has in para 9 of the judgment held that this expression would cover the goods used in any process/activity which is so integrally connected to the ultimate manufacture of goods without that process or activity, even if theoretically possible, is commercially inexpedient. The scope of the expression used in the definition of input in Rule 2(k) of the Cenvat Credit Rules, 2004 - used in or in relation to manufacture of final products, whether directly or indirectly and whether contained the final products or not is much wider than the scope of the expression used in manufacture of and therefore the expression-used in or in relation to manufacture of final product, whether directly or indirectly in the definition of input in Rule 2(2) would cover all the goods whose use is commercially expedient in manufacture of final products.
5.2 Repair and maintenance of plant and machinery is an activity without which smooth manufacturing is not possible. Commercially, manufacturing activity is not possible with malfunctioning machines, and leaking tanks, pipes and tubes. Therefore the activity of repair and maintenance of plant and machinery is an activity which has direct nexus with manufacture of final products and the goods used in this activity would be eligible for Cenvat credit. For eligibility of an input for Cenvat credit what is relevant is whether the activity in which that input is used has nexus with the manufacture of final product and the nexus has to be determined on the basis of criteria as to whether that activity is commercially essential for manufacture of the final products.
6. In the result, the impugned order is set-aside and the appeal is allowed with consequential relief, if any, as per law