Cenvat credit on consumable testing items used in manufacture was allowed as inputs, not capital goods.

Carbon cups and temperature tips used at the molten stage of manufacture to test carbon, silicon and temperature were treated as consumables used in or in relation to manufacture, not durable capital goods. On those facts, the goods qualified as inputs for Cenvat purposes, and denial of credit was unwarranted. Cenvat credit was therefore admissible in favour of the assessee.

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Issues: Whether carbon cups and temperature tips used in the manufacture of cast iron castings were capital goods or consumable inputs, and whether Cenvat credit was admissible on them.

Analysis: The goods were used in the molten stage of manufacture to test carbon, silicon, and temperature, and were consumed in the process. On these facts, they were not durable capital goods but consumables used in or in relation to manufacture. The cited rules governing capital goods and Cenvat credit did not justify denial of credit where the goods were in substance inputs consumed in the manufacturing process.

Conclusion: The goods were inputs and not capital goods, and Cenvat credit was admissible in favour of the assessee.

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