Cenvat credit on fabrication materials and limitation without suppression were accepted for steel rods used in storage tanks.

Extended limitation was unavailable because the Department had already obtained the relevant details and there was no suppression of facts; the demand was therefore time-barred. Steel rods used to fabricate molasses storage tanks qualified for Cenvat credit because Rule 2(k) treats goods used in the manufacture of capital goods, when those capital goods are further used in the factory, as inputs. On that reasoning, the assessee was entitled to credit, and the impugned order failed both on limitation and on merits.

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Issues: (i) whether the demand was barred by limitation on the ground that there was no suppression of facts; (ii) whether steel rods used in the fabrication of molasses storage tanks were eligible inputs for Cenvat credit under the definition of input.

Issue (i): whether the demand was barred by limitation on the ground that there was no suppression of facts.

Analysis: The relevant period preceded the show cause notice by more than one year, and the Department had already sought information from the assessee and received the necessary details much earlier. In the absence of suppression of facts, the extended period was not available.

Conclusion: The demand was time-barred and could not be sustained on the ground of limitation.

Issue (ii): whether steel rods used in the fabrication of molasses storage tanks were eligible inputs for Cenvat credit under the definition of input.

Analysis: Rule 2(k) of the Cenvat Credit Rules, 2004 includes goods used in the manufacture of capital goods which are further used in the factory. Steel rods used to fabricate molasses storage tanks were treated as goods used in the manufacture of capital goods, and the storage tanks were held to be capital goods necessary for manufacture in the factory. On that reasoning, the materials used in fabrication qualified as inputs entitled to credit.

Conclusion: The assessee was entitled to Cenvat credit on the steel rods used for fabrication of the molasses storage tanks.

Final Conclusion: The impugned order was unsustainable both on limitation and on merits, and the assessee succeeded in the appeal with consequential relief.

Ratio Decidendi: Goods used in the manufacture of capital goods that are further used within the factory fall within the ambit of inputs for Cenvat credit.

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