The Rajasthan High Court has held that welding electrodes used for repairing and maintenance of plant & machinery are not involved in the manufacturing process but are inputs.
Hindustan Zinc Ltd, the petitioner questioned whether the Tribunal is correct in holding that Welding Electrodes used for repair and maintenance of plant and machinery as well as other welding work in building areas are eligible for CENVAT Credit when in fact the welding electrodes are not capital goods as defined under Rule 2 (b) of the erstwhile Cenvat Credit Rules, 2002 now Rule 2 (a) of the Cenvat Credit Rules, 2004?
The appellants have submitted that the question of law has already been answered in favour of the assessee and against the revenue by the Division Bench passed in the case of Hindustan Zinc Ltd.
It was also submitted that relying on the above-referred judgment, the respondent – the department has already granted benefits to the appellants for various periods while holding that the welding electrodes used for repairing and maintenance of plant & machinery are eligible for CENVAT credit both as capital goods as well as inputs. Copies of such orders are annexed with application No.1/23.
Supreme Court in Jawahar’scase, held, that capital goods can be machines, machinery, plant equipment, apparatus, tools or appliances. Any of these goods, if used for producing, or processing any goods, or for bringing about any change in any substance, for the manufacture of final product, would be ‘capital goods’, and would qualify for MODVAT credit. Then as per clause-b the components, spare parts and accessories of the goods mentioned above would also be capital goods and would qualify for MODVAT credit.
A division bench comprising Justice Vijay Bishnoi and Justice Yogendra Kumar Purhit observed that since the controversy raised in these appeals has been set at rest by the Division Bench of this Court by the judgment passed in Hindustan Zinc Ltd.’s case (supra) while answering the question framed in these appeals in favour of the assessee, we deem it appropriate to allow these appeals in terms of the judgment passed by the Division Bench of this Court in Hindustan Zinc Ltd.’s case (supra).
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