ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against the Order-in-Appeal dated 27.2.2004 wherein it was held that credit of duty paid on electrodes is not eligible to the appellants.
2. The relevant facts arise for consideration are that the appellants are manufacturers of cement and have availed credit on many inputs and one of them is welding electrodes. The department sought to reverse the credit on electrodes on the ground that they are not inputs. The matter was adjudicated and the adjudicating authority confirmed the demand and also imposed penalty of Rs. 50,000/- on the appellants. On an appeal the Commissioner (Appeals) has also upheld the order-in-Original in toto.
3. Learned Advocate appearing for the appellants submits that the welding electrodes used by them in the factory is integral the process of manufacture as they are required for repairing and rebuilding of the parts which gets worn out. He also submits that for crushing the lime stone into fine powder the machinery which is used gets worried out and it is required to be replaced or gap has to be filled and for this purpose welding electrodes are used by the appellants. He also submits that the said welding electrodes are also used for re-building and re-fabricating the sheet in the cement mills. He submits that the Larger Bench decision in the case of Jaypee Rewa Plant v. CCE, Rajpur is on the ground that the said decision did not consider that the plant and machinery can be repaired even while running. The Larger Bench had not considered, that, unless until the machinery is repaired they would not cope up to demand of production. He submits that he would rely upon the decision of the Larger Bench in the case of CC & CE, Meerut-I v. Modi Rubber Ltd. and Maihar Cement v. CCE, Raipur which are directly on the point which was not placed before the Larger Bench in the case of Jaypee Rewa Plant case.
4. Learned D.R. on the other hand submits that the Larger Bench in the case of Jaypee Rewa Plant has considered all the arguments which were placed before them and which are similar to the arguments of the Advocate that welding electrodes are not eligible for credit. He also relies upon the decision in the case of Indian Seamless Metal Tubes Ltd. v. CCE, Aurangabad 2004 (177) ELT 374 (Tri.-Mumbai).
5. Considered the submission of both sides and perused the record. I find that it is not in dispute that welding electrodes which are used for the appellants in their cement factory is for repair and maintenance of machinery. However, the said maintenance and repair may be required for smooth functioning of the plant, the use of welding electrodes would not get covered, now, in the said machinery. The Larger Bench in the case of Jaypee Rewa Plant has in Para 6 categorically considered the relevant law as it stood during the period and came to the conclusion that welding electrodes used for repair and maintenance of machinery were not eligible for inputs for Cenvat Credit under the Rules.
6. In view of the above Larger Bench decision directly on the point of welding electrodes being not considered as inputs I find that the Larger Bench decision in the case of Modi Rubber is not applicable and does not carry that much weight. Further the decision relied upon in the case of Maihar Cement was delivered on 24.10.2002 which was prior to the decision of the Larger Bench’s order in the case of Jaypee Rewa Plant. The reason, not citing of Modi Rubber and Maihar Cement case before the Larger Bench, would not in any way vitiate order of the Larger Bench in the case of Jaypee Rewa Plant. Reliance placed by the learned Advocate in the case of Indian Seamless Metal Tubes Ltd. v. CCE, Aurangabad would be of no help to me, as, the learned Single Member disagreeing with the Larger Bench decision could have referred the matter to further Larger Bench, but after distinguishing Jaypee Rewa case he did not refer the matter but went on a different direction stating that welding electrodes eligible as capital goods. I am unable to agree with the findings of the learned Single Member Bench in the case of Indian Seamless Metal Tubes Ltd.
7. In view of the above findings I do not find any merit in the appeal of the appellants. Accordingly the appeal is dismissed, but penalty imposed on the appellants is unwarranted as the whole dispute of credit on welding electrodes was being challenged in one forum or another. Therefore, penalty on the appellants is set aside. Appeal partly allowed.
(Dictated & pronounced in the Open Court.)