Cenvat credit on fabrication goods used for storage tanks is admissible when tanks qualify as capital goods under the rules.

Cenvat credit is available on HR coils, MS plates, channels and similar Chapter 72 goods when they are used to fabricate storage tanks deployed in the factory for manufacturing final products. The text explains that storage tanks qualify as capital goods, and goods used in their manufacture are treated as inputs under Explanation 2 to the Cenvat Credit Rules. The exclusion for goods used in constructing factory sheds, foundations or support structures does not apply where the tanks are not shown to be embedded to the earth or otherwise used for such excluded purposes. On that basis, the Tribunal's consistent view was that the credit is admissible.

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Issues: Whether Cenvat credit was admissible on HR coils, MS plates, channels and similar goods used for fabrication of storage tanks employed in the factory.

Analysis: The disputed goods were found to have been used for fabrication of storage tanks, supported by certificates placed on record and accepted by the first appellate authority. Storage tanks fall within the definition of capital goods, and by virtue of Explanation 2 to the Cenvat Credit Rules, goods used in the manufacture of capital goods qualify as inputs. The exclusion relating to goods used for construction of factory shed, foundation or support of capital goods did not apply on the facts, and there was no disputed allegation that the tanks were embedded to the earth. The consistent view of the Tribunal was followed that Chapter 72 goods used in fabrication of capital goods used in manufacture of final products are eligible for credit.

Conclusion: Cenvat credit was held admissible, and the Revenue's challenge failed.

Ratio Decidendi: Goods falling under Chapter 72 used in fabrication of capital goods deployed in the factory for manufacture of final products are eligible as inputs, unless they are used for construction of shed, foundation or support structures excluded by the rules.

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