Case Law Details
Nayara Energy Limited Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
CESTAT Ahmedabad held that welding material used for repairs and maintenance of the plants is eligible for cenvat credit. Further, Railway line material used to move inputs/ raw material and manufactured goods within the factory premises is directly connected to the manufacture of final product and therefore, the credit cannot be denied on these items.
Facts- The issue involved in this appeal are whether the appellant are entitled for Cenvat credit on inputs viz. Welding Electrodes, Wire FLR, Filler Wires, Welding Wire, Wire Rope, material used for railway line and capital goods viz M.S. Gratings / G.I. Coated Gratings. Ld. Commissioner vide impugned order denied the Cenvat credit on the welding Electrodes, Wire FLR, Filler Wires, Welding Wire and Wire Rope on ground that appellant’s use of the said goods for repair and maintenance of plant and machinery cannot be considered to have been used ‘in or in relation to the manufacture of final products’ as they are not used co-extensively with the process of manufacture of petroleum products and hence not integrally connected with the manufacture. Therefore credit is not available to the appellant. The learned Commissioner has also denied the Cenvat credit on M.S Gratings/ G.I. Coated Gratings on the ground that the said goods used by the Appellant can neither be classified as Component, Spares or Accessories of the Plant and machinery used in the manufacture of final products. Further he denied the Cenvat credit on material used in laying of Rail Lines on the ground that such Rail Line was situated outside the factory premises, therefore, credit cannot be extended.
Conclusion- Held that all the goods have been used in or in relation to manufacture of the final product directly or indirectly. MS Gratings were used as an essential accessory for supporting and holding and for approaching or reaching out plants/ processing units of refinery in which raw material is processed for manufacture of petroleum products. Looking to the nature of the industry, it is a technological necessity without which the processing unit cannot perform. As regard welding material it is used for repairs and maintenance of the plants and the repair and maintenance activities are essential for smooth manufacturing operations without which manufacturing activity is not feasible, therefore, the cenvat credit is clearly admissible. Railway line material is used to move inputs/ raw material and manufactured goods within the factory premises. The movement of goods through railway track is directly connected to the manufacture of final product, therefore, the credit cannot be denied on these items. We find that the appellant have cited various judgements. There is no dispute that all these items on which the credit was claimed by the appellant have been dealt with in various judgements and the credit was allowed.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
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