Cenvat credit for dumpers and tippers used inside the factory was allowed as capital goods under manufacturing-linked use.

Dumpers and tippers used within a factory for moving raw materials, coal and finished goods were treated as eligible for Cenvat credit as capital goods under the Cenvat Credit Rules, 2002. Rule 2 was read with the inclusive scope of capital goods, and the equipment's use in handling and internal movement of materials was regarded as part of processing connected with manufacture. The reasoning applied the principle that activities integrally connected with further manufacture fall within use "in or in relation to manufacture". On that basis, the disallowance of credit was set aside.

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Issues: Whether dumpers and tippers used within the factory for movement and handling of raw materials, coal and finished goods were eligible for Cenvat credit as capital goods under the Cenvat Credit Rules, 2002.

Analysis: The equipment was used inside the factory for movement of raw materials and finished products and for handling of coal and other materials. Rule 2 of the Cenvat Credit Rules, 2002 was construed along with the inclusive scope of capital goods, and the use of such equipment was treated as part of processing and handling connected with manufacture. The reasoning was supported by the principle that activities integrally connected with further manufacture fall within the expression "in or in relation to manufacture".

Conclusion: Dumpers and tippers used within the factory were held to be eligible for Cenvat credit as capital goods, and the disallowance was set aside.

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