Broad Cenvat credit eligibility for factory-used inputs upheld where materials supported fabrication and packing activities.

The amended definition of inputs under Rule 2(k) of the Cenvat Credit Rules, 2004 was treated as broad enough to cover goods used in the factory by the manufacturer for fabrication and other manufacturing-related work. MS plates, MS sheets, welding rods, steel wire, wire mesh and MS strapping were accepted as eligible inputs because the assessee supported their use with a Chartered Engineer's certificate, work sheets and statutory records, showing deployment for solvent storage tanks, welding, insulation support and packing. Since procurement was undisputed, no diversion was alleged, and the items were used for factory-related purposes, credit could not be denied merely because they were not directly incorporated in the final product.

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Issues: Whether Cenvat credit was admissible on MS plates, MS sheets, welding rods, steel wire, wire mesh and MS strapping used in the factory for fabrication of solvent storage tanks and for packing and other factory-related use.

Analysis: The amended definition of inputs under Rule 2(k) of the Cenvat Credit Rules, 2004 is wide and covers all goods used in the factory by the manufacturer of the final product. The appellant produced a Chartered Engineer's certificate and supporting work sheets showing use of the disputed items for fabrication of storage tanks, welding work, insulation support and packing. Storage tanks form part of capital goods and were necessary for the manufacturing activity. The department did not dispute procurement of the goods or allege diversion, and the goods were reflected in the statutory returns and credit statements. Credit could not be denied merely because the items were not directly used in the final product.

Conclusion: The disallowance of Cenvat credit was unjustified and was set aside. The credit was held admissible in favour of the assessee.

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