CENVAT credit on storage tanks and cryogenic vessels was denied because they were not used as eligible capital goods or inputs.

CENVAT credit on vertical storage tanks and portable cryogenic vessels was found inadmissible because the items were installed at customers' premises or used for transportation and supply of gases, not in the manufacturer's factory. For capital goods, Rule 2(a) of the CENVAT Credit Rules, 2004 required use in the factory of the final product, and the asserted link to storage and warehousing service was not accepted. The vessels were also treated as durable, returnable containers rather than packing material, so they did not qualify as inputs under Rule 2(k) for the relevant period. Subsequent service tax payment and earlier case law did not change the credit position on these facts.

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Issues: Whether CENVAT credit was admissible on vertical storage tanks and portable cryogenic vessels claimed as capital goods or inputs for manufacture and for provision of storage and warehousing service.

Analysis: The items in question were found to have been installed at customers' premises or used for transportation and supply of gases, not in the manufacturer's factory. Under Rule 2(a) of the CENVAT Credit Rules, 2004, capital goods must be used in the factory of the manufacturer of final products, and the claimed nexus with output service was not accepted. The vessels were also held to be durable and returnable containers rather than packing material, and therefore not eligible as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004 for the relevant period. The subsequent service tax payment and the reliance on earlier case law were held not to alter the credit position on the facts of the case.

Conclusion: The denial of CENVAT credit on both vertical storage tanks and portable cryogenic vessels was upheld.

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