Rajasthan High Court - Jodhpur

Aaditya Cement vs C.C.E.Jaipur-2 And Anr. ... on 17 August, 2023

Bench: Vijay Bishnoi, Yogendra Kumar Purohit

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

D.B. Central/Excise Appeal No. 1/2010

Aditya Cement

----Appellant Versus

C.C.E., Jaipur-II & Anr.



                                                                    ----Respondents


For Appellant(s)              :    Mr. Sharad Kothari

For Respondent(s)             :    Mr. Kuldeep Vaishnav



             HON'BLE MR. JUSTICE VIJAY BISHNOI

HON'BLE MR. JUSTICE YOGENDRA KUMAR PUROHIT

Judgment / Order

17/08/2023

1. Learned counsels for the parties have submitted that the

controversy involved in the instant case is squarely covered by the

order dated 1.7.2008 passed by the Division Bench of this Court in

Hindustan Zinc Ltd. Vs. Union of India & Ors., reported in

2008 (132) ECC 3.

2. This appeal has been admitted while framing the following

question of law :

"Whether in the facts and circumstances of the case, Welding Electrodes used for repairs and

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maintenance of plant & machinery are eligible for CENVAT Credit both as capital goods as well as inputs ?"

3. Learned counsel for the appellant has submitted that the

question of law, framed in this appeal, has already been answered

in favour of the assessee and against the revenue by the Division

Bench of this Court vide aforesaid judgment passed in the case of

Hindustan Zinc Ltd. (supra).

4. Learned counsel for the appellant has also submitted that

leave to appeal against the above-referred judgment filed by the

revenue has already been dismissed as withdrawn by the Hon'ble

Supreme Court. It is further submitted that since the judgment

passed in Hindustan Zinc Ltd.'s case (supra) has attained

finality, this appeal is liable to be allowed in terms of the aforesaid

judgment.

5. It is also submitted that relying on the above-referred

judgment, the respondent - department has already granted

benefit to the appellant for various time 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.

6. Learned counsel for the revenue has argued that though the

SLP against the judgment passed by this Court in Hindustan Zinc

Ltd.'s case (supra) has been dismissed as withdrawn, however,

while withdrawing the SLP, the Hon'ble Supreme Court has clearly

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observed that the questions of law are left open. It is further

submitted that certain SLPs filed on behalf of the revenue before

the Hon'ble Supreme Court against the judgments of different

High Courts are still pending, therefore, it would be appropriate to

wait for the decision of the Hon'ble Supreme Court on the points

involved in this appeal.

7. Heard learned counsel for the parties.

8. This Court, in Hindustan Zinc Ltd.'s case (supra), while

considering the question of law, whether welding electrodes used

for repairing and maintenance of plant & machinery both as

capital goods as well as inputs, has answered the same in favour

of the assessee and against the revenue by making following

observations :

"6. This appeal was admitted on 13th January, 2006, by framing the following substantial question of law:

Whether welding electrodes used for repairs and maintenance of plant and machinery are eligible for CENVAT credit both as capital goods as well as inputs.

7. We have heard learned Counsel for the parties and have gone through the Judgment in Jaypee Rewa Plant's case, as relied upon by the learned Counsel for the department, and have also gone through the Judgment of Hon'ble Supreme Court, in CCE v. Jawahar Mills reported in MANU/SC/0397/2001MANU/SC/0397/2001:2001(132)ELT3 (SC), relied upon by the learned Counsel for the Appellant.

8. In Judgment of Hon'ble Supreme Court in Jawahar's case, it is held, that capital goods can be machines, machinery, plant equipment, apparatus, tools or appliances. Any of these goods, if used for producing, or processing of 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

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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. Then moulds and dies, generating sets, and weigh etc. has four also been held to be eligible for MODVAT credit, even if they are not used for producing the final product, or used for process of any product, for the manufacture of final product, or used for bringing about any change in any substance, for the manufacture of final product. The only requirement is, that the same should be used in the factory of the manufacturer, thus, it was held, that the language is to be interpreted very liberally. Then the contention of the Revenue, about the goods involved, being not satisfying the requirement of capital goods, was negatived on the ground, that it was not the case of the Revenue, set up all through.

9. On the other hand in JP Rewa's case the eligibility of credit was denied, which was claimed as "inputs". Then so far as the claim made for MODVAT credit on the basis of it being capital goods, it was denied only on the ground, that in the declaration, it was not so claimed, and the Assessee has not even furnished details of any capital goods for captive consumption, to enable the adjudicating Authority to ascertain, whether such goods were covered by definition of capital goods. Thus, for want of evidence to show, that any part of any electrodes, and gases, was used in the manufacture of any capital goods for captive consumption, the claim was negated.

10. In our view, the Judgment of Hon'ble Supreme Court, in JK Cottons SPG. & WVG Mills Co. Ltd v. Sales Tax Officer, Kanpur reported in 1997 (91) ELT 34 has a 5 material bearing on the controversy involved in the present case. It may be noticed, that the Tribunal in J.P. Rewa case has referred to this Judgment of Hon'ble Supreme Court in JK Cotton's case, by reproducing a part of the headnote, but then, the very significant continuing next sentence has been omitted from consideration, in as much as the sentence following the portion quoted by the Tribunal, is as under:

They need not be ingredients or commodities used in the processes, nor must they be directly and actually needed for turning out or the creation of goods.

11. In that case the Hon'ble Supreme Court even went to the extent of holding, that use of electrical equipments, like lighting, electrical humidifiers, exhaust fan etc. were also taken to be necessary equipment, to effectively carry on the manufacturing process. Thus, with the above, if the

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quoted part of the Judgment in JK Cotton's case is read, it becomes clear, that the expression "in the manufacture of goods" should normally encompass entire process carried on by the dealer, of converting raw materials into finished goods, where any particular process, or activity, is so integrally connected with the ultimate production of the goods, but for that process, manufacturing, or processing of the goods would be commercially inexpedient, goods required in that process would, fall within expression "in the manufacturing of goods".

12. In our view the proposition propounded above sets the controversy at rest. The question, as framed, is accordingly required to be answered in favour of the Assessee.

13. We are not inclined to accept the logic and reason given in the JP Rewa Plant Mills's case, and following the letter and spirit of the JK Cotton's case coupled with Jawaharmal's case, set aside the Order of the Authorities below.

14. In view of the above discussion, the question so framed, is answered in favour of the Assessee and against the revenue. Resultantly the appeal is allowed. Impugned Order is set aside. The Appellant is held to be entitled to the credit as availed. The notice issued by the Dy. Commissioner accordingly stands quashed, and the proceedings dropped."

9. Learned counsel for the revenue is not in position to dispute

the fact that the revenue has granted benefit to the assessee in

subsequent years by relying on the judgment passed by this Court

in Hindustan Zinc Ltd.'s case (supra). However, it is submitted

that the revenue has decided not to challenge the said orders on

the ground of monetary limit.

10. Be that as it may, since the controversy raised in this appeal

has been set at rest by the Division Bench of this Court by

judgment passed in Hindustan Zinc Ltd.'s case (supra), while

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answering the question framed in the appeal in favour of the

assessee, we allow this appeal in terms of the judgment passed by