CENVAT credit on fabrication and testing materials allowed for manufacturing-linked use, including storage tanks and machinery parts.

CENVAT/MODVAT credit was held admissible on iron and steel items, fabricated tanks, pipes, plates, channels, chemicals and allied materials used in fabrication, storage and testing activities connected with manufacture. The text states that credit is not confined to items directly used in the final product, and that materials used for fabrication of storage tanks, replacement of worn-out machinery parts, storage of raw and finished goods, and laboratory testing can qualify as inputs or capital goods under the credit regime. The Revenue's challenge was rejected.

---

---

Issues: Whether CENVAT/MODVAT credit was admissible on iron and steel items, fabricated tanks, pipes, plates, channels, chemicals and allied materials used in fabrication, storage and testing activities connected with manufacture.

Analysis: The disputed goods were found to have been used in or in relation to manufacture, including fabrication of storage tanks, replacement of worn-out parts of machinery, storage of raw materials and finished goods, and laboratory testing. The cited authorities were applied to hold that credit is not confined to items used directly in the final product, and that goods used for such ancillary manufacturing purposes can qualify as inputs or capital goods under the relevant credit regime.

Conclusion: The credit was held admissible and the Revenue's challenge was rejected.

---