Cenvat credit on plastic crates used for internal factory handling was upheld as linked to manufacture.

Plastic crates used inside the factory for handling, storage and transportation of goods were treated as eligible for Cenvat credit because they operated as material handling devices connected with manufacture. Applying the Larger Bench view, the court noted that proper movement and storage of raw materials and finished goods contribute to the effective conduct of manufacturing and may bring such items within the scope of inputs or accessories used in relation to manufacture. On that basis, the credit claim was allowed and the denial of credit was held unsustainable.

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Issues: Whether plastic crates used within the factory for transporting and storing goods are eligible for Cenvat credit as capital goods or input.

Analysis: The issue was governed by the Larger Bench view that plastic crates used as material handling devices within the factory advance the effectiveness of the manufacturing machinery and are used in relation to the manufacture of final products. Proper storage and transportation of raw materials and finished goods were treated as part of the manufacturing process, and plastic crates were therefore regarded as accessories or inputs eligible for credit.

Conclusion: The plastic crates were held eligible for Cenvat credit, and the denial of credit was unsustainable.

Ratio Decidendi: Goods used for internal handling, storage, and transportation within the factory, where they contribute to the effective conduct of manufacture, may qualify as eligible input or accessory for Cenvat credit.

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