The Customs Excise and Service Tax Appellate Tribunal in CCE-Kutch (Gandhidham) versus Almac Enterprise wherein decided that amount incurred for repair and maintenance of plant and machinery eligible for Cenvat Credit.
It was alleged that whether the appellant is eligible for the cenvat credit on inputs such as MS Angles, MS Channels, MS plates and MS Pipes etc. used in repair and maintenance of plant and machinery in their factory.
The counsel for Revenue contended before CESTAT that credit is not admissible on these inputs in view of the Boards Circular, as the goods were used in repair and maintenance of the capital goods.
The tribunal bench heard the submission and perused the records and said that “This Tribunal consistently held that MS Angles, Channels, Beams etc., used in Repair and Maintenance of Plant and Machinery in the factory is admissible to credit”.
The tribunal bench comprising of Judicial Member D. M. Misra pressed the reliance on the decision of Rajasthan High Court in the case of Hindustan Zinc Ltd. wherein 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.
Also, bench relied on various decisions to draw a conclusion in favour of Assessee.
The bench also observed that “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 the direct nexus with the manufacture of final products and the goods used in this activity would be eligible for the 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 the manufacture of the final products”.
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