Credit allowable on Welding Electrodes used for Repair and Maintenance of Machineries: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Hyderabad bench recently held that cenvat credit is available in respect of welding electrodes used for Repair and Maintenance of Machineries as per the amended definition of inputs under CENVAT Credit Rules, 2004.

Appellant is a manufacturer of cement and he has used welding electrodes in repairs and maintenance of the machinery and availed CENVAT Credit on the duty paid on the welding electrodes during the period May, 2013 to May, 2015. The department took a view that the welding electrodes were not used in or in relation to manufacture of final products and therefore, no credit is admissible as they do not qualify to be called as inputs under the CENVAT Credit Rules, 2004.

The Tribunal, while allowing the claim of the appellant noted that the welding electrodes are used for repair and maintenance of capital goods within the factory of manufacturer and these capital goods are used for manufacture of the final product although the relationship is remote and not direct.

“So by no stretch of imagination can it be said that these welding electrodes have no relationship whatsoever with the manufacture of the final product. Therefore, in terms of the amended definition of inputs under CENVAT Credit Rules, 2004 (after 2011) as is applicable to the relevant period, the welding electrodes can definitely be called inputs,” the bench said.