Custom, Excise & Service Tax Tribunal
Cce, Allahabad vs M/S Honeywell Sugars Pvt. Ltd on 25 March, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Court No. 1 Date of hearing/decision: 25.03.2013 Honble Sh. Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982. 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Excise Appeal No. 491 of 2009-SM (Arising out of order in appeal No. 125-CE/ALLD/2008 dated 29.12.2008 passed by the Commissioner (Appeals), Central Excise, Allahabad) CCE, Allahabad Appellants Vs. M/s Honeywell Sugars Pvt. Ltd. Respondent
(Earlier M/s U.P. State Sugar and Cane Development Corporation Ltd.) AND Excise Appeal No. 896 of 2009-SM (Arising out of order in appeal No. 125-CE/ALLD/2008 dated 29.12.2008 passed by the Commissioner (Appeals), Central Excise, Allahabad) M/s U.P. State Sugar and Cane Development Corporation Ltd. Appellant Vs. Vs. CCE, Allahabad Respondent Present Ms. Shweta Bector, DR for the appellant-Revenue Present Ms Rashi Sureka, Advocate for the Assessee Coram: Honble Sh. Rakesh Kumar, Member (Technical) Final Order No. 55988 - 55989 / 2013 Per: Rakesh Kumar:
The point of dispute in both these appeals arising out of the same order-in-appeal is as to whether the welding electrodes and H.R. Plates used for repair and maintenance of the plant and machinery are eligible for cenvat credit or not. The Commissioner (Appeals) while holding that welding electrodes are not eligible for cenvat credit, allowed the cenvat credit on in respect of H.R. Plates used for repair and maintenance. Against the part of the Commissioner (Appeals) order allowing the cenvat credit in respect of H.R. Plates the Revenue is in appeal and against part of the Commissioner (Appeals)s disallowing the cenvat credit on welding electrodes the appellant have filed this appeal.
2. Head both sides.
3. Ms. Shweta Bector, ld. DR assailed the impugned order in respect of H.R. Plates by relying upon the judgment Jaypee Rewa vs. CCE reported in 2003 (159) ELT 553 (Tri. LB), SAIL vs. CCE reported in 2008 (222) ELT 237 and also judgment of Honble A.P. High Court in the case of Sree Rayalseema Hi-Strength Hypo Ltd. vs. CC&CE, Tirupati reported in 2012 (278) ELT 167 (A.P.). She, therefore, pleaded that the impugned order permitting cenvat credit in respect of H.R. Plates used for repair and maintenance of the plant and machinery is not correct. She also emphasised that the judgment of the Tribunal in the case of SAIL stands affirmed by the Apex Court inasmuch as SLP filed by SAIL against the same was dismissed. Relying upon the same judgment she pleaded that cenvat credit in respect of welding electrodes used for repair and maintenance of plant and machinery has been correctly denied.
4. Ms. Rashi, Advocate, the ld. Counsel for the appellant, pleaded that the issue involved in this case stands decided in favour of the respondent by the judgment of Honble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. vs. CCE, Raipur reported in 2010 (266) ELT 690 (Chhattisgarh), judgment of Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. vs. Union of India reported in 2008 (220) ELT 517 and the judgment of Karnataka High Court in the case of Alfred Herbert (India) Ltd. reported in 2010 (257) ELT 29 (Kar.); that Calcutta High Court in the case of Singh Alloys & Steel Ltd. vs. Assistant Collector of Central Excise reported in 1993 (66) ELT 594 (Cal.) has also held that definition of input is not dependent upon what ought to be used but what is in fact used or what is commercially essential to use and that without regular repair and maintenance of the plant and machinery essential for smooth operations are not possible and therefore the inputs used for repair and maintenance have to be treated as the inputs used in or in relation to manufacture and would be eligible for cenvat credit
5. I have considered the submissions from both the sides and perused the record. Though, Honble A.P. High Court in the case of Sree Rayalaseem Hi- Strength Hypo Ltd. has held that welding electrodes used for repair and maintenance are not eligible for cenvat credit as activity of repair and maintenance is distinct from manufacture, I find that three other High Courts Honble High Court of Chhattishgarh in the case of Ambuja Cements (supra), Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. (supra) and Honble Karnataka High Court in the case of Alfred Herbert (India) Ltd. (supra) have taken a contrary view holding that welding electrodes other items used for repair and maintenance of plant and machinery would be eligible for cenvat credit. Even otherwise also I am of the view that the point as to whether repair and maintenance is an activity distinct from manufacture is not relevant, as for permitting cenvat credit in respect of an input what is relevant is as to whether the use of the item has nexus with manufacture and the question of nexus has to be determined on the basis as to whether without use of that item, manufacture, though theoretically possible, is commercially feasible. Honble Calcutta High Court in the case of Singh Alloys & Steel Ltd. vs. Asstt. Collector of Central Excise reported in 1993 (66) ELT 594 (Cal.) has also held that for determining the question as to whether an input is eligible for cenvat credit what is relevant is whether its use is commercially expedient and what ought to be used is not relevant. Since with defective machinery, leaking pipes and tubes and leaking tanks manufacturing operations are not commercially possible and regular repair and maintenance is an essential activity for smooth manufacturing operation, the inputs used for repair and maintenance of the plant and machinery would be eligible cenvat credit.
6. In view of the above discussion, the Revenues appeal No. E/491/2009 is dismissed and the appeal filed by M/s U.P. State Sugar & Cane Development Corporation is allowed.
(Rakesh Kumar) Member (Technical) Pant 5