In Central Excise Appeal No. 89/2009 -RAJ HC- Rajasthan High Court rules in favour of J.K. Cement Works, allows CENVAT credit for Oxygen & Acetylene Gases used for maintenance of plant & machinery
Justice Vijay Bishnoi & Justice Rajendra Prakash Soni [07-07-2023]

Read Order: J.K. Cement Works v. Commissioner, Central Excise and Ors

Chahat Varma

New Delhi, July 31, 2023: The Jodhpur bench of the Rajasthan High Court ruled in favour of J.K. Cement Works (appellant), stating that Oxygen Gas & Acetylene Gas used for repairs and maintenance of plant and machinery can be treated as components/spares and/or accessories of welding machines falling under Heading 84.68 of Chapter 84 of the Tariff. As a result, they are eligible for CENVAT Credit as capital goods in accordance with Rule 2(a)(A)(iii) of the CENVAT Rules, 2004.

The issue in this case revolved around whether Oxygen Gas & Acetylene Gas used for repairs and maintenance of plant and machinery can be considered components/spares and/or accessories of welding machines and qualify for CENVAT Credit under Rule 2(a)(A)(iii) of the CENVAT Rules, 2004.

The Court referred to the judgment of the Division Bench in Hindustan Zinc Limited v. Union of India (UOI) and Others [LQ/RajHC/2008/731], which ruled in favour of the assessee, stating that capital goods can include machines, machinery, plant equipment, apparatus, tools, or appliances used for producing, processing, or bringing about any change in any substance for the manufacture of a final product. The components, spare parts, and accessories of such goods are also considered capital goods and qualify for MODVAT credit. Even items like moulds and dies, generating sets, and weigh scales have been deemed eligible for MODVAT credit, even if they are not directly involved in the production or manufacturing process of the final product. The only requirement is that these items must be used in the factory of the manufacturer.

Based on the precedent set by the Division Bench's judgment, the Court allowed the appeal, deeming Oxygen Gas & Acetylene Gas as eligible for CENVAT Credit as capital goods under Rule 2(a)(A)(iii) of the CENVAT Rules, 2004.