Functional nexus with production justified Cenvat credit on an in-factory railway track used for goods transport.

Railway track used exclusively inside the factory for transporting goods in the course of manufacture was treated as having a direct functional nexus with production and making commercial production expedient. On that basis, the denial of Cenvat credit was held unsustainable, and credit on the railway track was allowed. The disallowance was set aside, with consequential relief, because facilities integrally connected with the manufacturing process and used within the factory can qualify for credit under the Cenvat Credit Rules, 2004.

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Issues: Whether railway track, exclusively used inside the factory for transport of goods in the course of manufacture, was eligible for cenvat credit under the Cenvat Credit Rules, 2004.

Analysis: The railway track was found to be exclusively used by the appellant for transportation of goods within the factory and was directly connected with the manufacture of the final product. On that basis, and applying the principle that facilities having an immediate nexus with production and making commercial production expedient qualify for credit, the denial of credit was held unsustainable.

Conclusion: The appellant was entitled to cenvat credit on the railway track.

Final Conclusion: The disallowance of cenvat credit was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Goods or facilities exclusively used within the factory and integrally connected with the manufacturing process can qualify for cenvat credit where they bear a functional nexus with production.

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