M/S. India Cements Ltd vs Cce, Trichy

(Arising out of Order-in-Appeal No. 72/2012 dated 29.03.2012 and 344/2012 dated 29.11.2012, passed by the Commissioner of Customs & Central Excise (Appeals), Trichy).

M/s. India Cements Ltd. : Appellant

Vs.

CCE, Trichy : Respondent

Appearance

Ms. S. Nanditha, Adv., For the appellants

Ms. Indira Sisupal, AC (AR) For the respondent

CORAM

Honble Shri R. PERIASAMI, Technical Member

FINAL ORDER No. 41058 - 41059 / 2015

Date of Hearing/Decision: 24.03.2015 Per: R. Periasami

These appeals were filed against the Order-in Appeals passed by the Commissioner (Appeals). Since the issue is identical in nature, both the appeals are taken together for disposal.

2. The brief facts of the case are that the adjudicating authority in his Order-in-Originals disallowed Cenvat credit wrongly taken and also imposed penalty under Rule 15 of CCR, 2004. On appeal the Commissioner (Appeals) rejected the appeals and upheld the order of the adjudicating authority. Hence the present appeals.

3. Ld. Advocate appearing on behalf of the appellants submits that welding electrodes used in repair and maintenance of plant and machinery are eligible for input credit. He relied on the following case laws:-

1. CCE, Trichy Vs. India Cements Ltd.

2009 (238) ELT 411 (Mad.)

2. TN Newsprint & Papers Ltd. Vs. CCE 2015-TIOL-267

3. TN Newsprint & Papers Ltd. Vs. CCE 2014-TIOL-1719

4. CCE Vs. CESTAT 2014 (309) ELT 71 (Mad.)

5. India Cements Ltd. Vs. CESTAT & Ors.

C.M.A. Nos. 3688,3689 & 3694 of 2014.

6. Hindustan Zinc Ltd. Vs. UOI 2008 (228) ELT 517 (Raj.)

4. On the other hand, the Ld. AR reiterated the findings of the Commissioner (Appeals) and submitted that the issue of admissibility of Cenvat credit on welding electrodes used in repairs and maintenance of plant and machinery has been referred to the LB of the Supreme Court. Therefore, the input credit on welding electrodes is not eligible. She relied on Sree Rayalaseema Hi-Strength Hypo Ltd. Vs. CCE, Tirupati  2012 (278) ELT 167 (A.P) in support of her contention.

5. After hearing both the sides I find that the short issue involved relates to the admissibility of cenvat credit taken on welding electrodes used for repair and maintenance of plants and machinery. Honble High Court of Madras in the case of CCE Vs. India Cements (supra) dismissed the Revenue appeal and upheld the Tribunals Order. The relevant portion of the said order is reproduced as under:-

4.?Aggrieved by the said order, the appellant has filed the above appeal, raising the following question of law.

Whether the Tribunal is correct in holding that the goods i.e. Welding Electrodes used for repairs and maintenance are covered under the definition of Capital Goods in terms of Rule 57Q prevailing the material time and whether the credit availed on welding electrodes is in order?

5.?The Larger Bench of the Tribunal in Jawahar Mills Ltd. v. Commissioner of Central Excise, Coimbatore [1999 (108) E.L.T. 47], held that control panels, cables, welding electrodes, etc. would also qualify as capital goods under Rule 57Q of the Rules and would be eligible for Modvat credit.

6.?On appeal against the said decision in Commissioner of Central Excise, Coimbatore v. Jawahar Mills Ltd. [2001 (132) E.L.T. 3], the Apex Court, confirming the views of the Larger Bench, dismissed the appeal holding that power cables and capacitors, control panels, cables distribution boards, switches and starters, air compressors and electric wires cables would qualify as capital goods under Rule 57Q of the Central Excise Rules.

7.?The Apex Court in Commissioner v. Birla Jute & Industries Ltd. [2002 (139) E.L.T. A93], while confirming the earlier views of the Supreme Court and the Larger Bench of the Special Tribunal, held that Modvat credit was admissible for Electrodes and Calibration Gas Mixture (Welding equipment), but not for explosives under erstwhile Rule 57A of the Rules.

8.?As the question of law referred is in favour of the assessee, as held by the Tribunal and the Apex Court in the cases cited above, we hold that the Tribunal is correct in holding that the welding electrodes used for repairs and maintenance are covered under the definition of capital goods in terms of Rule 57Q of the Rules. Accordingly, the appeal stands dismissed. Consequently, CMP No. 8460 of 2005 is also dismissed.

Further Honble High Court of Rajasthan in the case of Hindustan Zinc Ltd. Vs. UOI (supra) has held similarly and allowed the credit on welding electrodes. The ratio of the Honble High Court squarely applied to the facts of the present case. By respectfully following the above decisions I hold that the appellants are eligible for cenvat credit on the capital goods used in repair and maintenance of plant and machinery. Accordingly, the impugned orders are set aside and both the appeals are allowed. (Operative part of the Order pronounced in the open Court on 24.03.2015)

(R. PERIASAMI) TECHNICAL MEMBER BB

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