In a significant relief to industry players, the Supreme Court of India on Tuesday allowed the appeals filed by Kesar Enterprises Limited in a long-running dispute over CENVAT credit. The Bench of Justice B.V. Nagarathna and Justice Ujjal Bhuyan ruled in favour of the company, applying an earlier judgment that had settled the legal position on tax credit for items used in plant maintenance.
The order was passed on February 10, 2026, in Civil Appeal Nos. 1479 and 1480 of 2026.
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Background of the Case
The dispute involved Kesar Enterprises Limited and the Commissioner, Customs, Central Excise & Service Tax, Meerut-II. The core issue was whether the company could claim CENVAT credit on items such as welding electrodes, jointing sheets, and stainless steel plates used for maintaining and repairing plant and machinery.
CENVAT credit allows manufacturers to reduce their tax burden by claiming credit for duties paid on inputs used in manufacturing. The tax department had questioned whether items used for maintenance and repair could qualify as inputs “used in or in relation to manufacture.”
The matter had reached the Supreme Court after earlier proceedings.
What Happened in Court
When the appeals were taken up, counsel for Kesar Enterprises submitted that the issue was already settled by a previous Supreme Court judgment delivered on December 7, 2023, in The Kisan Cooperative Sugar Factory Ltd. v. Commissioner, Central Excise, Meerut-I.
Referring to that ruling, the Bench reproduced the key finding. The earlier judgment had clearly held:
“The interpretation of the expression ‘used in or in relation to manufacture’ is of a very wide import and takes within its scope and ambit all items used in the process of manufacture whether directly or indirectly and whether contained in the final product or not.”
The Court had further clarified in that decision that:
“The items used for maintenance of plant and machinery are also items used in the manufacture of finished goods. Hence, credit on the items used for maintenance, repair, upkeep or fabrication of plant and machinery are admissible to the assessees.”
During the hearing, counsel for the tax department fairly acknowledged that the present case was covered by the earlier judgment.
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Court’s Observations
Taking note of the submission made by the department’s counsel, the Bench observed that there was no need for further examination of the issue. Since the legal position had already been settled, the Court chose to apply the same reasoning.
The judges made it clear that once the law has been interpreted broadly to include items used indirectly in manufacturing, maintenance-related goods cannot be excluded from credit.
The Decision
Recording the statement made by the department at the Bar, the Supreme Court allowed the appeals filed by Kesar Enterprises Limited.
“In the circumstances, we take note of this submission made at the Bar and allow these appeals in terms of the aforesaid judgment,” the order stated.
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All pending applications were also disposed of.
The ruling effectively grants Kesar Enterprises the benefit of CENVAT credit on items used for maintenance, repair, and upkeep of plant and machinery, in line with the settled legal position.
Case Title: Kesar Enterprises Limited v. Commissioner, Customs, Central Excise & Service Tax, Meerut-II
Case No.: Civil Appeal No. 1479 of 2026 (arising out of SLP (C) No. 621 of 2017) with Civil Appeal No. 1480 of 2026 (arising out of SLP (C) No. 8909 of 2020)
Decision Date: February 10, 2026
