Cenvat credit on capital goods cannot be denied where binding precedent on identical facts already covers the dispute.

Cenvat credit on the capital goods was held admissible because the dispute was already covered by the Tribunal's earlier decision in the assessee's connected matter, which had followed binding High Court precedent on similar facts. With no separate surviving basis to sustain the demand, the consequential penalty and denial of credit also failed. The issue was decided in favour of the assessee, and the appeal was allowed; the impugned demand and penalties did not survive.

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Issues: Whether the demand, penalty and denial of Cenvat credit on the capital goods in question could be sustained.

Analysis: The dispute was held to be covered by the Tribunal's earlier decision in the appellant's own connected matter, which had followed the decision of the High Court on the admissibility of credit in similar circumstances. In view of that binding and directly applicable precedent, no separate surviving basis remained to sustain the impugned demand and penalties.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The appeal was allowed and the impugned demand and penalties did not survive.

Ratio Decidendi: Where the controversy is squarely covered by an earlier binding decision on identical facts, the impugned demand and consequential penalties cannot be sustained.

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