IMPORTANT POINT
The main legal point established in the judgment is the interpretation and application of the definition of 'Capital Goods' and 'Inputs' under the Cenvat Credit Rules, 2004, and the relevance of previous judgments in determining the entitlement of Cenvat credit on specific items used for repair and maintenance of plant and machinery.

ORDER :

Bhargav D. Karia, J.

1. Heard learned counsel Ms.Hetvi Sancheti for the appellant and learned advocate Mr.Vishal Agrawal with learned advocate Ms.Dimple K.Gohil for the respondent.

2. This appeal arises under Section 35(G) of the Central Excise and Salt Act, 1944 from the Judgment and Order dated 11.08.2023 passed by the Customs Excise and Service Tax Appellate Tribunal (for short “the CESTAT”) in Appeal No.11509 of 2013. The Revenue has proposed following substantial questions of law:

“A. Whether the Hon'ble CESTAT committed a grave error in interpreting and applying the definition of 'Capital Goods' as provided under Rule 2(a)(A) of the Cenvat Credit Rules, 2004, and wrongly allowing Cenvat Credit on goods such as "Welding Electrodes," "Welding filler Wires," "Wire FLR," "Welding Wire," "Wire Rope," and "M.S. Gratings/G.I. Coated Gratings," which do not fall within the specified categories?

B. Whether the Hon'ble CESTAT overlooked the clear provisions of Rule 2(k) of the Cenvat Credit Rules, 2004, while allowing Cenvat Credit on goods like "Welding Electrodes," "Welding filler Wires," etc., which were used for repair and maintenance of Plant & Machinery, and not in the direct manufacturing process, as required by the definition of 'inputs' and resultantly CENVAT Credit on such goods cannot be allowed?

C. Whether the Hon'ble CESTAT incorrectly relied on judgments that are not final and have been challenged at higher forums, thereby disregarding the principle of judicial discipline and creating an erroneous precedent?

D. Whether the Hon'ble Tribunal erred in setting aside the order of the Adjudicating Authority, confirming the demand for the recovery of wrongly availed Cenvat Credit of Rs.1,56,73,968/-, and not considering the fact that the said goods were not entitled to be treated as 'Capital Goods' or 'Inputs' under the Cenvat Credit Rules, 2004?”

3. It is the case of the Revenue that whether the respondent assessee is entitled for Cenvat credit on inputs i.e. welding electrodes, wire FLR, filler Wires, Welding wires, Wire rope, material used for railway line and capital goods i.e. M.S.Gratings/G.I.Coated Gratings or not.

4. The Commissioner of CENVAT by order in original dated 12.03.2013 denied the CENVAT credit on above items on the ground that the use of such goods for repair and maintenance of plant and machinery by the respondent assessee can not be considered to have been used “in or in relation to the manufacture of final products”, as they are not used co- extensively in the process of manufacturing of the petroleum products by the respondent assessee. It was therefore held that the respondent assessee can not avail the Cenvat credit as such goods are not integrally connected with the manufacture of the petroleum products.

5. The Adjudicating Authority with regard to the Cenvat credit availed by the respondent on M.S.Gratings/ G.I.Coated Gratings held that such credit cannot be availed by the respondent as such goods can not be used by the respondent can not be classified as component spares or accessories of plant and machinery used in the manufacture of the final products. The Cenvat credit on such goods was also denied on the ground that the same was used in laying of rail lines and such rail lines were situated outside the factory premises.

6. Being aggrieved the respondent assessee preferred the appeal before the CESTAT. The CESTAT in the judgment and order passed in the appellants own case in final order no.A/12303/2021 dated 11.08.2021 and final order no.A/10084/2020 dated 14.01.2020 allowed the appeal.

7. Learned advocate Ms.Hetvi Sancheti submitted that the Adjudicating Authority after analysing the definition of input as provided in Rule 2(k) of the CENVAT Credit Rules 2004 upto 31.03.2011 and the Rule 2(k) of the CENVAT Credit Rules which were amended with effect from 01.04.2011 vide notification no.3 of 2011 held that the respondent assessee has not utilized the inputs of the goods mentioned herein above for