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Court No. ­ 3 Case :­ CENTRAL EXCISE APPEAL No. ­ 21 of 2012 Appellant :­ Commissioner Central Excise 7­A Ashok Marg Lucknow Respondent :­ M/S Bajaj Hindustan Ltd. Khambarkhera, Lakhimpur  Kheri Counsel for Appellant :­ Rajesh Singh Chauhan Counsel for Respondent :­ Rajesh Tewari

Hon'ble Sudhir Agarwal,J. Hon'ble Ravindra Nath Mishra­II,J. 1. 

This is an appeal under Section 35­G of Central Excise Tax Act,

1944 (hereinafter referred to as "Act, 1944") at the instance of Revenue, i.e.,   Commissioner,   Central   Excise,   Lucknow.   This   appeal   has   arisen from   the   judgment   and   order   dated   17.05.2012   passed   by   Custom, Excise   and   Service   Tax   Appellate   Tribunal,   New   Delhi  (hereinafter referred   to   as   "Tribunal")  allowing   appeal   of   Assessee   holding   that 'Welding Electrode' is eligible for CENVAT Credit. 2. 

The   Assessee,   i.e.,   M/s   Bajaj   Hindustan   Ltd.,   had   claimed   that

'Welding Electrode' is specified under Head 8311.00 of Central Excise Tariff   and   used   in   repair   and   maintenance   of   'Machines',   therefore, would   fall   within   the   category   of   'Capital   Goods'.   The   claim   was accepted by Tribunal allowing Assessee's appeal. 3. 

Before   this   Court,   appellant   has   contended   that   'Welding

Electrodes' would not fall in the category of 'Capital Goods' under the provisions   of   Rule   57­Q   of   Central   Excise   Rules,   1944  (hereinafter referred to as "Rules, 1944"). The question of law on which this appeal was admitted vide order dated 01.11.2012, required to be decided by this Court, is:

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"Whether   tribunal   suffers   from   substance,   learned   counsel keeping in view the fact. It is extremely non speaking?” 4.

Learned   counsel   for   the   parties,   however,   submitted   that   real

question up for consideration is, “whether “Welding Electrodes” would come  in  the   category  of   “Capital  goods”  as  claimed  by  Assessee and upheld by Tribunal or the Assessee has wrongly claimed CENVAT Credit on   use   of   Welding   Electrodes   during   the   period   in   dispute   in   this appeal”. 5.

So   far   as   first   question   is   concerned,   Tribunal   has   followed

another judgment dealing with similar question decided by Karnataka High Court in Commissioner of Central Excise and Service Tax, LTU. vs. ABB Ltd., 2011 (23) STR 97 and it is not shown to this Court that said judgment of Karnataka High Court does not cover dispute in this appeal, therefore, order of Tribunal cannot be said to be bad for want of reasons since reasons contained in the judgment followed by Tribunal would   form   part   of   order   of   Tribunal   also.   Question­1,   therefore,   is answered against Revenue. 6. 

Now we come to second question. The period of dispute for which

CENVAT  Credit  has   been  accepted   is  from   April,  2007   to  December, 2008. This Court finds that in the period of July' 2002 to 09.09.2004, matter of CENVAT Credit was governed by CENVAT Credit Rules, 2002 (hereinafter   referred   to   as   "Rules,   2002")  and   thereafter   by   CENVAT Credit Rules, 2004  (hereinafter referred to as "Rules, 2004"). The term 'Capital Goods' was defined in Rule 2 (b) of Rules, 2002 and Rule 2(a) of Rules, 2004 as under: Rules, 2002: "(b) "capital goods" means:­  (i)   all   goods   falling   under   Chapter   82,   Chapter  84,  Chapter   85, Chapter 90, heading No. 68.05 and sub­heading No. 6801.10 of the First Schedule to the Tariff Act; (ii) pollution control equipment;

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(iii) components, spares and accessories of the goods specified at (i) and (ii) above; (iv) moulds and dies; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office;"  Rules, 2004:  "(a) "capital goods" means:­  (A) All following goods, namely:­  (i)   all   goods   falling   under   Chapter   82,   Chapter  84,  Chapter   85, Chapter 90, heading No. 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule of the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii) above; (iv) moulds and dies; jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used­

 

(1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or  (2) for providing output service;" (B) motor vehicle registered in the name of provider of output service for providing taxable service as specified in sub­clauses (f),   (n),   (o),   (zr),   (zzp),   (zzt)   and   (zzw)   of   clause   (105)   of section 65 of the Finance Act;”

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7. 

It is admitted by the parties that the Heading of Chapter 8311 is

not   included   specifically   in   the   definition   of   'capital   goods'.   The Assessee, however, relied on Rule 2(b)(iii) of Rules, 2002 and Rule 2(a) (A)(iii) of Rules, 2004, and contended that 'Welding Electrodes' would come within the term 'components' so as to fall within the category of 'capital goods'. 8. 

The definition of 'capital goods' under Rule 2(b) of Rules, 2002

and Rule 2(a) of Rules, 2004 is exhaustive in the sense that it clearly specifies what 'capital goods' would mean. The items which fall under certain chapters of Central Excise Tariff Act are specifiably mentioned in Rule 2(b)(i) of Rules, 2002 and Rule 2(a)(A)(i) of Rules, 2004. Then comes pollution control equipment', moulds and dies, jigs and fixtures, refractories and refractory material, tubes and pipes and fittings thereof and storage tank. All these things, if used in the factory of manufacturer of final products, or, for providing output service, would mean 'capital goods'. However, it would not include any equipment or appliance used in office. There is one more aspect, i.e., Rule 2(b)(iii) of Rules, 2002 and Rule 2(a)(A)(iii) of Rules, 2004, which say that in respect to items mentioned in Rule 2(b)(i) and (ii) of Rules, 2002 and Rule 2(a)(A)(i) and   (ii)   of   Rules,   2004,   components,   spares   and   accessories   of   the goods   specified   thereunder   would   also   fall   within   the   category   of 'capital   goods'.   Having   failed   to   point   out   application   of   any   other provision under Rule 2 (b) of Rules, 2002 and Rule 2(a) of Rules, 2004, the stress on the part of Assessee was on the term 'components' under Rule 2 (b)(iii) of Rules, 2002 and 2(a)(A)(iii) of Rules,2004 and it is contended that 'Welding Electrodes', being used for maintenance and repair   of   machineries   and   factories,   would   fall   in   the   category   of "components", hence would be entitled for CENVAT Credit being 'capital goods'. We find that 'capital goods' as defined under Rule 2(b) of Rules, 2002 and 2(a) of Rules 2004, in substance, are pari­materia with the

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'capital goods' specified in Rule 57­Q of Rules, 1944 and there is no substantial difference therein. 9. 

Considering a similar argument in  the context of Rule 57­Q of

Rules, 1944, as it stood in 1999, similar question and submissions have already   been   considered   by   this   Court   recently   in  Central   Excise Appeal No. 135 of 2005 (M/s Upper Ganges Sugar & Industries Ltd. Vs. Commissioner Customs & Central Excise) decided on 25.2.2015. 10. 

For the reasons given in the judgment dated 25.2.2015 in  M/S

Upper Ganges Sugar & Industries Ltd. Vs. Commissioner Customs & Central Excise (supra), Question­2 is answered in favour of Revenue and against Assessee. 11. 

Appeal   is,   accordingly,   allowed.   The   order   of   Tribunal   dated

17.05.2012 is hereby quashed. 12. 

There shall be no order as to costs.

Order Date :­ 10.01.2017 AK

Welding Electrode - Taxscan.pdf

Respondent : M/S Bajaj Hindustan Ltd. Khambarkhera, Lakhimpur. Kheri. Counsel for Appellant : Rajesh Singh Chauhan. Counsel for Respondent : Rajesh ...

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