CENVAT credit on Welding electrodes used in repairs and maintenance of plant entitled for CENVAT credit – another High Court holds
FOR the last decade or more, one particular subject that was haunting all adjudication and appellate channels right from AC to SC (Assistant Commissioner to Supreme Court) was the issue of entitlement of credit on welding electrodes used in repairs and maintenance of plant and machinery.
In the Jaypee Rewa Plant case (), the Tribunal Larger Bench held that the welding electrodes were not entitled for credit.
The decision in Jaypee Rewa Plant came into consideration before the Rajasthan High Court in the matter of Hindustan Zinc Ltd., (), involving similar issue - "whether welding electrodes used for repair and maintenance of plant and machinery are eligible for CENVAT credits, both as capital goods as well as inputs?"
The Rajasthan High Court overruled Jaypee Rewa and held that they are entitled for credit. Revenue's SLP against the High Court decision was dismissed by the Supreme Court.
CESTAT, Kolkata Bench in SAIL's case (2007-TIOL-2272-CESTAT-RANCHI) held that credit is not admissible. SAIL's SLP was also dismissed by the Supreme Court.
Thus two cases – one against Revenue and one in favour – got dismissed at the SLP stage in Supreme Court.
Now what would be the law of the land?
This interesting issue was decided by a High Court recently.
The High Court held that
It is settled law that refusing of special leave to file appeal by a non-speaking or speaking order does not attract the doctrine of merger, whereas where an award, appeal or revision is provided against the order passed by the Court, Tribunal or any other authority before a superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law, as held by the Supreme Court in Kunha Yammed ().
The High Court held that decision in the matter of Jaypee Rewa Plant is not a good law in view of above judgment of the Rajasthan High Court.
Now Revenue has another opportunity to go the Supreme Court. How much revenue is lost by a few welding electrodes?