CENVAT credit on factory trolleys used for internal material handling is admissible where they aid the manufacturing process.

CENVAT credit was held admissible on trolleys used to move components within the air-conditioner assembly line because they formed part of the factory's material-handling arrangement and had an immediate, functional connection with manufacture. The decision applied the principle that goods used for transporting and storing materials within the factory can qualify for credit, following the Larger Bench view on plastic crates. Credit was therefore allowed in favour of the assessee, and the revenue's reliance on a case involving steel plates and M.S. channels for chimney fabrication was found inapposite on the facts.

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Issues: Whether CENVAT credit on trolleys used for carrying components within the assembly line of air-conditioners is admissible as capital goods or inputs.

Analysis: The trolleys were used for moving materials from one part of the assembly line to another and were part of the material-handling arrangement within the factory. The cited Larger Bench decision on plastic crates treated goods used for transporting and storing materials in the factory as eligible for credit because such use has an immediate and functional connection with manufacture. The same functional role was attributed to the trolleys in the present case. The revenue's reliance on a decision concerning steel plates and M.S. channels used for chimney fabrication was held inapposite because the facts and the nature of the equipment were different.

Conclusion: CENVAT credit on the trolleys is admissible and the claim is allowed in favour of the assessee.

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