Cenvat credit on capital goods upheld where use in concessional clearances was established despite no clearances during procurement period.

Cenvat credit on capital goods and parts cannot be denied merely because no clearances were made under a concessional notification during the procurement period, where the goods were otherwise used in manufacture of products cleared under that notification and the credit was otherwise admissible on the facts. The Tribunal distinguished the Revenue's relied-upon precedent on its factual setting and followed the appellant's own earlier favourable decision for another period. On that basis, the denial of credit, along with the associated duty, interest and penalty, was held unsustainable.

---

---

Issues: Whether the appellant was entitled to avail Cenvat credit on capital goods and parts thereof during the relevant period when it had not made clearances under the concessional notification but was also operating under the exemption notification.

Analysis: The appellant availed Cenvat credit on capital goods and parts during March 2005 to September 2005. The dispute turned on whether the absence of clearances under the concessional notification during that period disentitled the appellant from taking such credit. The Tribunal distinguished the earlier decision relied upon by the Revenue on the ground that, on the facts of the present case, the capital goods were used in the manufacture of goods cleared under the concessional notification and the issue had already been decided in the appellant's own case for another period in its favour.

Conclusion: The appellant was correctly entitled to avail Cenvat credit on the capital goods and parts thereof. The denial of credit, demand of duty, interest and penalty were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where a manufacturer is operating under both a concessional duty notification and an exemption notification, Cenvat credit on capital goods cannot be denied merely because no clearances under the concessional notification were made during the period of procurement, if the credit is otherwise admissible on the facts.

---