Cenvat credit on dual-use cryogenic tanks remains available when transportation charges are separately duty-paid.

Cenvat credit on cryogenic tanks used for storage and transportation of gases was held admissible where the tanks were part of the manufacturing and delivery chain and separate transportation charges were recovered from customers on which duty was discharged. The fact that the tanks served both storage and transport functions did not by itself justify denial of credit. The operative principle applied was that credit remains available when capital goods are integrally used in the production and delivery process and the relevant recovered value has suffered duty. The denial of credit was therefore unsustainable.

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Issues: Whether cenvat credit on cryogenic tanks used for storage and transportation of gases was admissible when separate transportation charges were recovered from customers and duty was discharged on such charges.

Analysis: The decisive consideration was whether the cost recovered for use of the tanks was subjected to central excise duty or service tax. The tanks were used within the factory for storage and were also deployed for transporting the final product to customers. The charges collected for transportation through the cryogenic tanks were separately recovered and duty was paid on that amount. Once the tanks were established to be used in the manufacturing chain and the value of the transportation activity was duty-paid, the credit could not be denied merely because the equipment served more than one function. The reasoning was consistent with the principle that credit is available where the capital goods are integrally used in the production and delivery process and the corresponding value has suffered duty.

Conclusion: Cenvat credit on the cryogenic tanks was admissible and the denial of credit was unsustainable.

Ratio Decidendi: Where capital goods are used integrally for storage and transportation of the manufactured goods and duty is discharged on the amount recovered for such use, cenvat credit cannot be denied on the ground of multiple use of the capital goods.

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