Cenvat credit on inputs for fabricating factory oil tank allowed where the tank was not embedded to earth.

Inputs used to fabricate an oil tank used in the factory qualified for Cenvat credit under Rule 2(k) of the Cenvat Credit Rules, 2004. The tank was treated as capital goods and was admitted to fall under Chapter 73 of the Central Excise Tariff Act, 1975. Credit could not be denied merely because the tank was characterised as immovable property, since the factual position showed it was not embedded to earth. The appellate denial, made without properly examining the use of the inputs in fabrication, was therefore unsustainable and credit was held admissible.

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Issues: Whether Cenvat credit on inputs used in fabricating an oil tank was admissible when the tank was treated as capital goods and was not embedded to earth.

Analysis: The appellate order had denied credit mechanically without examining the use of the inputs in fabrication of the oil tank. The tank was an admitted product falling under Chapter 73 of the Central Excise Tariff Act, 1975. Rule 2(k) of the Cenvat Credit Rules, 2004 permits credit on inputs used in the manufacture of capital goods used in the factory. The earlier appellate reasoning that the tank was immovable property did not displace the entitlement where the factual position showed that the tank was not embedded to earth and the inputs were used in its fabrication.

Conclusion: Cenvat credit on the inputs was admissible and the issue was decided in favour of the assessee.

Ratio Decidendi: Inputs used in the manufacture of capital goods used in the factory qualify for Cenvat credit under Rule 2(k) of the Cenvat Credit Rules, 2004, and credit cannot be denied merely on the ground that the resulting capital goods are treated as immovable property when they are not embedded to earth.

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