Modvat credit for batteries used at project sites was upheld where the sites formed part of the manufacturing premises.

Modvat credit on batteries used in a captive power generation and distribution system was treated as admissible where the goods were duty paid, received by the assessee, used in the final product, and the final product was dutiable. The department's objection that the inputs were not brought into the conventional factory premises was rejected because the project sites were accepted as part of the manufacturing premises for the system, and no material displaced the concurrent factual findings. The credit claim therefore succeeded.

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Issues: Whether Modvat credit on batteries used in the manufacture of a captive power generation and distribution system was admissible when the inputs were received and utilized at project sites and not within the conventional factory premises.

Analysis: The respondents had availed credit under the Modvat scheme on batteries used as inputs for the project. The department's sole objection was that the inputs were not brought into the factory and no manufacturing or processing was carried out in the factory premises. The record showed that the goods were duty paid, were received by the respondents, were used in the final product, and the final product was dutiable. The authorities below had accepted the respondents' case that the project sites formed part of the manufacturing premises for the system, and no material was placed to dislodge the concurrent factual findings.

Conclusion: Modvat credit was held admissible, and the departmental challenge failed.

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