Cenvat credit on windmill gear boxes cannot be denied when clearances are partly exempt and partly duty-paid.

Cenvat credit could not be denied on inputs used for windmill gear boxes where the goods were not manufactured exclusively as exempted goods and were cleared partly under exemption and partly on payment of duty. The basis for disallowance on exclusive use in exempted goods therefore failed, and the Revenue's challenge was rejected. The Tribunal also noted that the same issue had already been decided in the assessee's own case on identical facts.

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Issues: Whether Cenvat credit could be denied on inputs used in the manufacture of windmill gear boxes when the final products were cleared both on exemption and on payment of duty.

Analysis: The record showed that the windmill gear boxes were not manufactured exclusively as exempted goods; they were cleared in part under exemption and in part on payment of duty. In such a situation, the basis for denying credit on the footing of exclusive use in exempted goods failed. The Tribunal also noted that the same issue had earlier been decided in the assessee's own case on identical facts.

Conclusion: Cenvat credit could not be denied on the premise of exclusive use in exempted goods, and the Revenue's challenge failed.

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