Cenvat credit on tyres used in mining transport equipment allowed as inputs for integral raw-material handling in manufacture.

Tyres used on Low Profile Dump Trucks in captive mines were treated as eligible Cenvat inputs because captive mines formed part of the factory and the trucks were used in handling raw material as an integral part of manufacture. The Tribunal noted that the dump trucks were not capital goods under Rule 2(a), but held that the broad definition of input under Rule 2(k) covers goods used directly or indirectly in or in relation to manufacture, even if not contained in the final product. Consumables used over time may still qualify for credit. Credit was therefore held admissible, and the assessee succeeded.

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Issues: Whether tyres used in Low Profile Dump Trucks employed in captive mines for transporting ore are eligible for Cenvat credit as inputs under the Cenvat Credit Rules, 2004.

Analysis: The Tribunal held that captive mines are part of the factory and that Low Profile Dump Trucks do not fall within the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. It further held that the definition of input under Rule 2(k) is broad enough to cover goods used in or in relation to manufacture, directly or indirectly, even if not contained in the final product. Tyres used on the dump trucks were found to be used in the process of handling raw material, which is an integral part of manufacture. The Tribunal also relied on the settled principle that consumables used over a period of time may still qualify for credit and rejected the Revenue's contention that the tyres were ineligible merely because they formed part of an item not classifiable as capital goods.

Conclusion: Cenvat credit on tyres used in Low Profile Dump Trucks in the captive mines was held to be admissible in favour of the assessee.

Final Conclusion: The impugned orders were set aside and the appeals succeeded on the question of eligibility of credit for tyres used in mining transport equipment.

Ratio Decidendi: Goods used in the process of handling raw materials as an integral part of manufacture may qualify as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004 even if they are used as parts of equipment not falling within capital goods under Rule 2(a).

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