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Appearance:

Appeared for the Appellant  Shri Ravi Raghavan, Advocate Appeared for the Respondent  Shri B.K. Singh, Jt. CDR and Sh. P.K. Singh, DR Coram: Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri M. Veeraiyan, Member (Technical) Oral Order No. ____ Per Shri Justice R.M.S. Khandeparkar:

Heard at length the learned Advocate for the appellants and learned Jt. CDR for the respondent.

2. The appellants challenge the order dated 18.03.2009 passed by the Commissioner (Appeals), Indore as well as the order dated 04.11.2008. The Joint Commissioner had disallowed the cenvat credit amounting to Rs.38,43,039/- including education cess and had directed recovery thereof from the appellants in terms of show cause notice dated 01.05.2008 under Rule 12 of the CENVAT Credit Rules 2002, Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, as also had ordered recovery of interest under section 11AB of the said Act and had imposed penalty to the tune of Rs. 5 lakhs on the appellants under Rule 13 of the CENVAT Credit Rules 2002 and Rule 15 of the CENVAT Credit Rules 2004 besides imposing mandatory penalty of Rs. 38,43,039/- under Section 11AC of the said Act. The Commissioner (Appeals) by his order dated 18.03.2009 has dismissed the appeal filed by the appellants and has confirmed the order passed by the Joint Commissioner, hence the present appeal.

6. Learned Jt. CDR on the other hand, submitted that both the authorities below after taking into consideration the facts of the case has correctly ruled that the welding electrodes used in the repairs and maintenance of the machines would not be inputs used in the process of manufacture of the final product. Drawing our attention to the expression capital goods and input as is found in CENVAT Credit Rules 2004, learned Jt. CDR submitted that the same are in paramateria with those found in CENVAT Credit Rules of 2002 in respect of the similar expressions. He further submitted that the expression capital goods as is found in Rule 2(a)(A)(i) and (iii) would disclose that as far as the capital goods are concerned which can be subjected to availing cenvat credit, the same do not include the materials used for repairs of the capital goods or other parts. Further, with reference to the expression inputs as is found in Rule 2(a) of the said rules, he submitted that it clearly discloses that the inputs must be used in the process of manufacture of the final product. Giving various examples, he tried to explain that it is not that each and every activity and each and every product which comes within the premises of the manufacturing unit that can be presumed to be an input unutilized in the process of the activity of the manufacture of the final product. He further submitted that it is not the case of the appellants that the welding electrodes are the capital goods. It is essentially the case of the appellants that they are the inputs used in relation to the manufacture of the final product. Considering that the welding electrodes are merely utilized in the process of repairs and maintenance of the machinery and merely because its operation is necessary in the process of manufacture of final product, that will not entitled the appellants to claim cenvat credit in respect of the duty paid on such product. Though the Apex Court had not admitted the SLP, it cannot be said that the SLP was rejected by passing non-speaking order. The Apex Court has clearly stated that on the facts of the case the same was being dismissed. According to learned Jt. CDR, therefore, the Apex Court after taking into consideration the facts of the case and the law as stated by the Larger Bench, the same having been found to be correctly applied to the facts that the SLP was rejected. Being so, the said decision is binding upon the Tribunal.

7. Referring to the Larger Bench decision in the matter of Jaypee Rewa Plant vs. CCE, Raipur reported in 2003 (159) ELT 553 (Tri. LB) and followed by the Division Bench in SAIL vs. CCE, Ranchi reported in 2008 (222) ELT (Tri. Kolkata), learned Jt. CDR submitted that when the matter was sought to be challenged by way of SLP against the decision in SAILs case, the Apex Court rejected the SLP by recording the reason for the same. According to learned Jt. CDR this discloses that the Apex Court agreed with the views expressed by the Tribunal in Jaypee Rewa Plant read with SAILs case and being so, the same would be binding upon the Tribunal. He further submitted that the process of repairs and maintenance of the machinery used in the manufacture of the final product is not integrally related to the process of the manufacture of the final product and, therefore, the products utilized for the repairs and manufacture cannot be termed as input for the manufacture or having utilized in relation to manufacture of the final products. He also submitted that the activity of the repairs and maintenance by itself does not generate either the final product or any part thereof. According to learned Jt. CDR the activity of repairs and maintenance does not form part of the process of manufacture of the final product.

8. Learned Advocate for the appellants also assails the impugned orders on the ground that the authorities could not have invoked extended period of limitation in the facts and circumstances of the case. According to the learned Advocate, the records clearly reveal that the Department was fully aware of the fact that the appellants had been availing cenvat credit in relation to the duty paid on the welding electrodes used in repairs and maintenance of the machinery all along from 2003 onwards, yet they chose to remain silent till March 2008 on which date show cause notice came to be issued. Being so, the claim prior to April 2007 was clearly barred by limitation as disclosed in Section 11AC of the said Act. In that regard, attention was sought to be drawn to para 13 of the reply filed by the appellants with reference to the show cause notice issued by the Department. Learned Jt. CDR in relation to challenge on the ground of bar of limitation submitted that the authorities below had found that the fact that he was taking cenvat credit in relation to the duty paid on the welding electrodes was suppressed from Department and it is only when it was revealed to the Department that it initiated proceedings. According to the learned Jt. CDR none of the documents submitted by the assessee disclosed specific use of the said welding electrodes and, therefore, in the absence thereof it can not be said that the Department was fully aware of the fact that the welding electrodes were not utilized as the inputs in the manufacture of the final product.