Appellant granted cenvat credit on capital goods despite installation outside factory premises.

The Tribunal allowed the appellant's appeal regarding the denial of cenvat credit on capital goods installed outside the factory premises. Despite the goods being located in a laboratory of a DTA unit, as they were used in the manufacturing process, the appellant was deemed eligible for the credit. Relying on precedents emphasizing usage in manufacturing, the Tribunal set aside the denial of credit, granting relief to the appellant.

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Issues:
1. Denial of cenvat credit on capital goods installed outside the factory premises.

Analysis:
The appellant, engaged in manufacturing Insoluble Sulphur, appealed against the denial of cenvat credit on imported capital goods, specifically an Analyzer, which was found installed in a laboratory of a DTA unit outside the factory premises. The authorities below had denied the credit, leading to a demand for duty, interest, and imposition of a penalty. The appellant contended that although the machine was not in the factory, its usage for testing was undisputed, making it eligible for credit under Rule 2(a) of the Cenvat Credit Rules, 2004. Citing various precedents, the appellant argued for credit allowance.

The main issue revolved around whether the appellant could avail cenvat credit for capital goods installed outside the factory. Rule 2(a) of the CCR, 2004 mandates that capital goods must be used in the factory of the manufacturer of the final products. The Tribunal referred to the decision in Vikarm Cement case, emphasizing that usage within the factory for manufacturing qualifies for credit. Precedents like Siva Shankar Granites, Surya Colour Products, and others were also cited to support the allowance of credit even if the goods were used outside the factory premises, provided they were used in the manufacturing process.

The Tribunal rejected the argument based on the Mangal Electricals Industries case, which the Ld. AR relied on, stating it did not align with the precedents and facts of the current case. Despite the installation of capital goods outside the factory, since they were utilized in the manufacturing process, the Tribunal held that the appellant was entitled to cenvat credit. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed with any consequential relief.

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