Cenvat credit on material handling equipment fails where plastic crates and trays are not used in manufacture.

Plastic crates and P.P. sheet trays used only for storing and handling raw materials, sub-assemblies and finished goods in a factory were analysed under Rule 2(b) of the Cenvat Credit Rules, 2002 to see whether they qualified as inputs. The reasoning treated them as material handling equipment, not goods consumed or substantially used in manufacture, and distinguished authorities dealing with processes integrally connected with production because no manufacturing step involving these items was shown. The distinction between inputs and capital goods was treated as material, and the items were found not to qualify for Cenvat credit.

---

---

Issues: Whether plastic crates and P.P. sheet trays used for storing and handling raw materials, sub-assemblies and finished goods in the factory qualified as "inputs" for Cenvat credit under Rule 2(b) of the Cenvat Credit Rules, 2002.

Analysis: The items were used only as material handling equipment and were not consumed or substantially used up in the manufacture of the final products. The reasoning adopted for similar crates in an earlier decision was followed, and the cited authorities on processes integrally connected with manufacture were distinguished because no manufacturing process or step involving these goods was shown. The definition of "input" could not be extended to goods conventionally regarded as capital goods, and the distinction between inputs and capital goods was treated as material.

Conclusion: The crates and trays were not inputs eligible for Cenvat credit; the Revenue's challenge succeeded and the assessee's claim failed.

---