Cenvat credit on coke transfer cars allowed as material handling equipment and accessories used in iron and steel manufacture.

Cenvat credit was admissible on coke transfer cars used to transport coke from the oven to the furnace in iron and steel manufacture, because the equipment functioned as material handling equipment and was necessary for the transfer process. The cars were treated as accessories capable of being used with machinery and of improving its effectiveness, consistent with the cited precedent and Larger Bench view on accessories. Credit was therefore allowed on the coke transfer cars, and the demand and penalty were set aside.

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Issues: Whether Cenvat credit was admissible on coke transfer cars as capital goods or accessories used for material handling in the manufacture of iron and steel products.

Analysis: The coke transfer cars were found to be used for transporting coke from the oven to the furnace and, without them, the transfer could not be carried out. Such equipment functioned as material handling equipment and advanced the effectiveness of the manufacturing process. Reliance was placed on the accepted understanding of an accessory as an item that is capable of being used with a machine and improves its effectiveness. The cited precedent on material handling equipment and the Larger Bench view on accessories supported this position.

Conclusion: Cenvat credit was held admissible on the coke transfer cars, and the demand and penalty order was set aside.

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