ORDER
S.L. Peeran, Member (J)
1. The Revenue is aggrieved with Order-in-Appeal No. 230/04 dated 10.9.2004 by which the Commissioner (A) has set aside the Order-in-Original passed by the Asst. Commissioner disallowing cenvat credit of Rs. 1,24,515/- in respect of items such as plain plates, welding electrodes and paints & thinners on the ground that these items were not used in or in relation to the manufacture of sugar. The Asst. Commissioner had taken a view that these items are used for repairs and maintenance of Sugar Plant & Machinery only. The Commissioner (A) after due consideration has passed the final order. The para 4 & 5 are reproduced here below.
4. I have carefully gone through the case records and the submissions made at the time of personal hearing. With the introduction of Cenvat Credit Rules, the definition of ‘capital goods’ and ‘input’ has undergone a change. ‘Capital goods’ means all goods falling under chapter 82, 84, 85, 90, 68.02 and 6801.10 of the first schedule to the Tariff Act, pollution control equipment, components, spares, accessories of the goods specified above, moulds and dies, refractory and refractory materials, tubes, pipes and fittings thereof and storage tanks used in the factory of manufacturer of the final products but does not include any equipment or appliance used in an office.
“Input” means all goods (except L.D.O/HSD and motor spirit) used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paints or as packing material or as fuel or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production.
5. From the perusal of the definition of ‘capital goods’ and ‘input’ given in the new Cenvat Credit Rules, it is evident that the scope of the Cenvat Credit Rules is wide enough to cover within it’s ambit all goods/inputs, received and utilized in the factory of the manufacturer. The expression, “used for manufacture of final product in the factory of the manufacturer or for any other purpose, within the factory of production”, would not be limited to ingredients or commodities/components used in the manufacturing process or those directly or actually needed for manufacture of the final goods. The said definition would also include all goods/items provided they are used in the factory of the manufacturer. Therefore, the goods/items used for repair and maintenance of the sugar plant and machinery, would qualify for availment of Cenvat Credit under the new Cenvat Credit Rules, 2001/2002. The Hon’ble Supreme Court of India has ruled in the case of CCE, Coimbatore v. Jawahar Mills Ltd. that for availing modvat credit, the goods need not be used in the manufacture of final product. Only requirement is that they should be used in the factory of production. Following the ratio of the said decision, I hold that the appellants are entitled to avail cenvat credit in respect of goods used for repair and maintenance of the sugar plant and machinery. The receipt and utilization sheets, angles, channels, plates, paints and electrodes is not disputed by the department. Therefore, the benefit of cenvat cannot be denied to the appellants. The orders passed by the learned Assistant Commissioner denying cenvat credit is therefore, not legal and proper. Manufacture of goods means the process of converting the raw materials into finished goods and whatever goods/items/machinery is required for converting the raw materials into finished goods the same would fall within the definition of ‘capital goods’/’inputs’ given in the Cenvat Credit Rules. In the case of Rosa Sugar Works v. CCE, Kanpur , modvat credit has been allowed on plates, bars and rods used for repairing damaged parts of machinery, storage tanks, boilers, etc. In the case of Hindustan Zinc Ltd. v. CCE, Jaipur-II 2002 (105) ECR 648 (Tri.), SS Plates, Plain plates, iron and steel items used for repairing machinery installed in the factory and used for manufacturing final products were held to be eligible for credit under CE Rules 57Q. The Hon’ble Tribunal relied on the ratio of the decision in the case of DSM Sugar Mills v. CCE 2002-100-ECR-546(T), while giving the above decision.
In view of above settled legal position, I pass the following order.
ORDER
The appeal filed by the appellants is allowed with consequential benefits. The order dated 29.8.2004 passed by the Assistant Commissioner, Eluru is set aside.
E/184/05
2. The same findings have been recorded in the case of CCE v. The Andhra Cements Ltd. also. This appeal arises from Order-in-Appeal No. 249/2004 (G) CE dated 29.9.2004, by which the Commissioner (A) has disallowed the cenvat/modvat credit in respect of items used in mines and allowed cenvat/modvat credit in respect of items/goods used in the factory for repair/maintenance of machinery/equipments to the appellants.
3. The learned DR took us through the grounds of appeal and contended that all these materials are required to be considered as only for repairs and not for the use in or in relation to the manufacture of sugar.
4. The learned Counsel submits that the Commissioner has passed the Order in the light of the Apex Court judgment rendered in the case of CCE, Coimbatore v. Jawahar Mills Ltd. and four other judgments noted in the order itself. He contended that the Divisional Bench of this Tribunal reexamined the issue again in the case of The India Sugars & Refineries Ltd. v. CCE, Bangalore vide final order No. 1997/05 dated 24.11.2005 and after detailed examination held that the benefit is required to be granted to the very item in question, as they were used in the manufacture of final product sugar. The Tribunal considered the ratio of the Punjab and Haryana High Court rendered in the case of CCE, Chandigarh-II v. National Fertilizer Limited reported in 2002 (79) ECC 758. The Bench also considered the earlier Larger Bench judgment of the Tribunal and the Supreme Court judgment noted in the order. He also produces a copy of the final order No. 2223/05 dated 20.12.2005 rendered in the case of CCE v. Mysore Cement Limited, in which the final order of M/s. The India Sugars & Refineries Ltd. was followed and the Revenue’s appeal was dismissed. He prays for dismissal of the appeal.
5. On a careful consideration, I notice that the Commissioner (A) has rightly followed the ruling noted in the order and has rightly given the benefit of cenvat credit on the item in question. The very item were considered by the Tribunal in the case of M/s. The India Sugars & Refineries Ltd. (supra), which is a detailed order rendered in light of the Punjab and Haryana High Court judgment in the case of CCE, Chandigarh-II v. National Fertilizer Limited (supra) and that of Apex Court judgment rendered in the case of CCE, Calcutta-II v. Eastend Paper Industries Ltd. and that of Indian Farmers Fertilizer Cooperative Ltd. v. CCE, Ahmedabad and Steel Authority of India Ltd. v. CCE AIR 1986 SC 2544. Further large number of judgments has also been considered. As the issue is fully decided in terms of these judgments, therefore, there is no merit in these appeals and the same are rejected.
(Pronounced and dictated in open Court)