Cenvat credit on capital goods upheld where equipment was used for both dutiable products and exempted rectified spirit.

Capital goods used up to the rectifier column in a manufacturing process producing both dutiable products and exempted rectified spirit were held eligible for Cenvat credit. The factual record showed use of the equipment for processing both categories of goods, and that mixed use supported the allowance of credit. No infirmity was found in the credit availment on the capital goods, so the revenue's challenge failed.

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Issues: Whether capital goods used in the manufacture of rectified spirit, denatured spirit and other products were eligible for Cenvat credit when the goods were used for both dutiable and exempted final products.

Analysis: The capital goods were found to be used up to the rectifier column in the manufacturing process, and the record showed that the respondent manufactured and cleared both dutiable products and exempted rectified spirit. On that factual basis, the finding that the capital goods were used for processing of both categories of goods was upheld, and no infirmity was found in the allowance of credit.

Conclusion: Cenvat credit on the capital goods was admissible, and the revenue's challenge failed.

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