CENVAT credit on raw-material storage racks allowed where storage was integral to the manufacturing process.

CENVAT credit was treated as admissible on MS slotted racks used to store raw material in the factory because storage of inputs was regarded as integral to manufacture. The reasoning was that manufacturing could not begin without delivery and storage of inputs, and equipment forming part of the storage and delivery system is directly or indirectly involved in the manufacturing process. On that basis, denial of credit on the racks was set aside and relief followed in favour of the assessee.

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Issues: Whether CENVAT credit was admissible on MS slotted racks used for storing raw material in the factory.

Analysis: The racks were used as a storage system for raw material. Such storage was treated as integral to the manufacturing activity because the manufacture could not begin without delivery and storage of inputs. The material relied upon also supported the view that systems used for storing and delivering inputs form part of the manufacturing process and are directly or indirectly involved in manufacture.

Conclusion: CENVAT credit was admissible on the MS slotted racks, and the denial of credit was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee obtained consequential relief.

Ratio Decidendi: Equipment used as an integral storage system for raw materials, when directly connected with the manufacturing process, qualifies for CENVAT credit.

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