Cenvat credit on machine parts used in factory allowed; immovable property objection rejected as beyond the show cause notice.

Cenvat credit on parts and components used in machines installed in the factory was admissible where the duty-paying documents stood in the manufacturer's name and the goods were received and used in the factory for manufacture of final products. Rule 57-AA of the Cenvat Credit Rules, 2002 covered capital goods specified for use in the factory of the manufacturer. Denial on the ground that the machines were immovable property failed because that basis was not set out in the show cause notice and was therefore outside its scope.

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Issues: Whether Cenvat credit on parts and components used in machines installed in the factory could be denied on the ground that the machines were immovable property and on a ground not set out in the show cause notice.

Analysis: The notice required the duty-paying documents to stand in the appellants' name, and the record showed that the parts and components were received with such documents and were used in the appellants' factory in machines employed for manufacture of final products. Rule 57-AA of the Cenvat Credit Rules, 2002 treated capital goods as specified items used in the factory of the manufacturer of final products. The denial based on the machines being immovable property was not the basis of the notice and was therefore outside its scope.

Conclusion: Credit was admissible to the appellants, and denial on the stated grounds was not sustainable.

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