Appellants granted Cenvat credit for duty on boiler parts benefiting sponge iron manufacturing

The appellants were allowed to claim Cenvat credit on duty paid components of a boiler used in their factory for steam and electricity production, benefiting sponge iron manufacturing. The Tribunal held that the appellants could avail credit for duty paid on the boiler components as the Rule encompassed not only capital goods but also their parts. The objection on steam and power dutiability was rejected, citing precedent. Consequently, the impugned order was set aside, and both appeals were decided in favor of the appellants.

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Appellants received boiler components under purchase order and fabricated/assembled them in-factory as part of a power plant producing steam and electricity used in the manufacture of sponge iron. Revenue denied credit on duty paid for those components. At the relevant time the Rule "included not only the capital goods but also their components," permitting credit where components are used within the factory for fabrication/assembly of capital goods. The Tribunal relied on precedent Commr. of Central Excise, Raipur v. Jindal Steel and Power Ltd., 2003 (158) E.L.T. 178 (Tri.-Del.), which allowed Modvat/Cenvat credit on capital goods used in installation of a power plant used for sponge iron manufacture, rejecting the objection that steam and power themselves are not dutiable. Holding: appellants are "eligible for Cenvat credit in respect of duty paid on the components of boiler used in their factory premises for fabrication assembly of the boiler as part of the power plant used for production of steam and electricity for ultimate use in the manufacture of sponge iron." Appeals allowed.

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