The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has held that the HR Coils/Sheets and welding electrodes used in the repair and maintenance of the capital goods are eligible for CENVAT Credit.
The appellant, M/s DRA Industries Ltd., manufactures MS Billets and avails the benefits of Cenvat credit, and pays central excise duty on its final products. The department found that the appellant had availed Cenvat credit on welding electrodes and HR Coils/Sheets during the period July 2015 to March 2016 amounting to Rs. 18,208/- and Rs. 3,44,264/- respectively under the category of inputs, which do not qualify as inputs under Rule 2 (k) of Cenvat Credit Rules, 2004. The department denied the above-said Cenvat credit and recover the same under Rule 14 of CCR and read with Section 11A (1) of Central Excise Act along with interest under Section 11AA.
Mr. P.V. Subba Rao, Member (Technical) observed that “all goods used in the factory by the manufacturer all final products” qualify as inputs under CCR. Therefore, Cenvat credit is admissible on such goods.
“There is no dispute that the welding electrodes were used for maintenance of the plant and the HR Coils/Sheets were used in making lining around the furnaces in the plant. Evidently, the plant will be within the factory. Since the HR Coils, as well as the welding electrodes, are used within the factory of the manufacturer, Cenvat credit is admissible on both as inputs. I also find that this issue is no longer res Integra and the jurisdictional High Court of Andhra Pradesh has, in the case of Sree Rayalaseema Hi-Strength Hypo Ltd. versus Commissioner of Customs & Central Excise, Tirupati3 held that the goods in used their repair and maintenance qualify as inputs under Rule 2 (k) of CCR,” the department said.
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