Cenvat credit on capital goods depended on factual use during exempt and dutiable periods, leaving no substantial question of law.

Cenvat credit on capital goods was examined in the context of exemption under Notification No. 30/2004-CE, where the goods were used during both exempt and dutiable periods. The Tribunal found, on the facts, that the machines were not exclusively used in exempted manufacture, because duty had been paid before the exemption period and the same equipment was later used for dutiable production. The High Court treated that conclusion as factual and held that the Revenue's challenge did not raise any substantial question of law. The Tribunal's order was therefore left undisturbed and the appeal failed.

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Issues: Whether the Tribunal was justified in holding that Cenvat credit on capital goods was available where the goods were used during a period in which the assessee had opted for exemption under Notification No. 30/2004-CE, and whether any substantial question of law arose for consideration.

Analysis: The assessee had cleared the finished goods at nil rate of duty only for the period from 9.7.2004 to 31.3.2005 under the exemption notification, whereas before that date duty had been paid and the same machines were again used later for manufacture of dutiable goods. On these facts, the Tribunal's view that the capital goods could not be treated as exclusively used in the manufacture of exempted goods was treated as a factual conclusion. The Court held that the Revenue's challenge did not disclose any substantial question of law.

Conclusion: The Tribunal's order was upheld and the Revenue's appeal failed.

Final Conclusion: The dispute was concluded on the basis that the controversy was factual rather than legal, leaving no substantial question of law for interference.

Ratio Decidendi: Where the Tribunal's conclusion that capital goods were not exclusively used in exempted manufacture rests on the factual use of the goods during both dutiable and exempt periods, no substantial question of law arises in appeal.

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