Cenvat credit on factory storage racks upheld where used in manufacturing setup and covered by the input definition.

Cenvat credit was held admissible on racks imported for use in the factory for storage of raw materials and finished goods, because their use formed part of the manufacturing set-up and they fell within the scope of "input" under Rule 2(k) of the Cenvat Credit Rules, 2004. The contrary view was rejected, and the earlier Larger Bench ruling on the same issue was followed in observance of judicial discipline. Credit could not be denied merely because the goods had initially been claimed under a different classification as capital goods. The denial of credit was therefore unsustainable.

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Issues: Whether Cenvat credit was admissible on racks imported for use in the factory for storage of raw materials and finished goods.

Analysis: The disputed goods were used in the manufacturing set-up for proper storage and the question was whether they could be denied credit merely because they were claimed as capital goods. The relevant definition under Rule 2(k) of the Cenvat Credit Rules, 2004 was applied, and the earlier Larger Bench decision on the same issue was followed on the principle of judicial discipline. The reliance placed on contrary reasoning was found misplaced, and there was nothing in the definition of input to exclude racks from its scope.

Conclusion: Cenvat credit on the racks was admissible and the denial of credit was unsustainable.

Ratio Decidendi: Where goods used in the factory for storage are covered by the definition of input under Rule 2(k) of the Cenvat Credit Rules, 2004, credit cannot be denied merely because they were initially claimed under a different classification.

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