Excise – Cestat Kolkata: Welding electrodes used for repairs and maintenance of plant and machinery are eligible for Cenvat Credit both as capital goods as well as inputs - Appellant was regularly filing the periodic statutory Returns disclosing therein the factum of availment of credit and therefore, the penalty is not imposable: Appeal allowed [Order attached dated 30 September 2022]
- The Appellant, M/s. Maithan Ispat Limited, is engaged in the manufacture of sponge iron and MS billet.
- The Books of Accounts of the Appellant pertaining to Financial Year 2012-13 and 2013-14 were audited by the department and an objection to availment of Cenvat Credit amounting to Rs.28,522/- on “Welding Electrodes” as capital goods, was raised.
- This objection was raised on the ground that the Tribunal in the case of SAIL Vs. CCE, Ranchi had held that welding electrodes are not eligible for Cenvat credit.
- A Show Cause Notice dated 28.09.2015 was issued for recovery of Rs.28,552/- with interest and for imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004.
- Aggrieved, the appellant filed an appeal.
- Whether the appellant is eligible for availment of Cenvat credit on welding electrodes?
- The Tribunal observed that Appellant submitted that Hon’ble Rajasthan High Court in the case of Hindustan Zinc Ltd. [2008 (228) ELT 517 (Raj.)], overruled the Larger Bench decision in Jaypee Rewa Plant case, and held that welding electrodes used for repairs and maintenance of plant and machinery are eligible for Cenvat Credit both as capital goods as well as inputs. Admittedly, Revenue’s appeal against the said Hindustan Zinc Ltd. case has been admitted on 09.01.2009, however, the said judgement has not been stayed by the Hon’ble Supreme Court.
- Also, Hon’ble Calcutta High Court in Hindusthan Engg. & Ind. Ltd. case, which is the jurisdictional High Court of this Bench, and particularly in the absence of any contrary decision holding the field, the issue regarding admissibility of Cenvat Credit on Welding Electrodes has to be decided in favour of the appellant, as the same being no longer res integra.
- Further, the Tribunal observed that the Appellant was regularly filing the periodic statutory Returns disclosing therein the factum of availment of credit as impugned herein that the demand in the present case is barred by limitation and therefore, the penalty on the Appellant is not imposable under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Act.
- Also, the Show Cause Notice in the present case having been issued purely on the basis of the AG Audit objection, without any independent investigation, is not sustainable in law.
- Appeal allowed.