Cenvat credit on components of capital goods upheld for fabrication materials and boiler handling system parts.

Cenvat credit was admissible on HR SS plates used in fabricating the storage tank for Ethyl Acetate, because the tank was treated as specified capital goods and the plates formed part of its body. Credit was also admissible on AC corrugated sheets used in the boiler's bagasse handling system, since they protected bagasse from moisture and enabled uniform feeding into the furnace, supporting steam generation and manufacture of excisable goods. On this basis, both items were treated as components or parts of capital goods used in the manufacturing process, and the denial of credit and related penalty were set aside.

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Issues: Whether Cenvat credit was admissible on HR SS plates used in fabrication of the storage tank of Ethyl Acetate and on AC corrugated sheets used in the bagasse handling system of the boiler.

Analysis: The storage tank was treated as specified capital goods, and the HR SS plates were found to be used in its fabrication as part of the body of the tank. The AC corrugated sheets were found to be used in the boiler's bagasse handling system, where they protected the bagasse from moisture and enabled uniform feeding into the furnace, without which steam generation and manufacture of excisable goods would be . On this basis, the disputed items were held to be components or parts of capital goods used in the manufacturing process, making credit admissible.

Conclusion: Cenvat credit was held admissible on both HR SS plates and AC corrugated sheets, and the denial of credit and related penalty were set aside in favour of the assessee.

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