While hearing a recent appeal, the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed the cenvat credit to cement manufacturers on welding electrodes as inputs used in manufacturing final products, namely cement and clinker.
M/s. Nuvoco Vistas Corporation, the appellant is manufacturer of cement and clinker having manufacturing plant and machinery in Chittorgarh. They have received welding electrodes for the repair and maintenance of plant and machinery, which is used for the manufacture of the product i.e. cement and clinker. A Show cause notice was issued that welding electrodes could not be considered as input and therefore, cenvat credit was not available on them. The Assistant Commissioner dropped the demand as proposed in the show cause notice.
The Revenue filed an appeal that the cenvat credit is inadmissible on welding electrodes, which are used for repair and maintenance of plant and machinery and these activities are not related to the manufacture of the final products. The appeal was allowed and the impugned order was passed confirming the demand under the show cause notice.
The single bench of Binu Tamta (Judicial Member) has observed that as per sub-rule 4 of Rule 57-A of the Central Excise Rules, 1944, the credit of specified duty is allowed in respect of two categories of inputs, namely (i) inputs used in the manufacture of final products and (ii) inputs used in or in relation to the manufacture of final products, whether directly or indirectly, and whether contained in the final product or not.
While allowing the appeal, the Tribunal held that the appellant is entitled to cenvat credit on welding electrodes as inputs used in the manufacture of final products – cement and clinker. Further set aside the order.
Saurabh Suman Sinha appeared for the appellant and Rohit Issar appeared for the respondent.
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