Cenvat credit on inputs for captive dies was allowed despite exemption for the intermediate dies used in manufacture.

Cenvat credit on Raw Die Blocks and Inserts was treated as admissible where they were used to manufacture Dies, and those Dies were captively consumed in producing the final excisable goods. The Explanation to the definition of inputs was applied to goods used in the manufacture of capital goods that are further used in the factory. The exempt status of the intermediate Dies under Notification No. 67/95-CE did not by itself bar credit, since the final products were dutiable. The disallowance was therefore set aside in favour of the assessee.

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Issues: Whether Cenvat credit was admissible on Raw Die Blocks and Inserts used in the manufacture of Dies, where the Dies were captively used in producing the final excisable goods and were exempted under Notification No. 67/95-CE.

Analysis: The credit was claimed on the footing that the Raw Die Blocks and Inserts were inputs used in the manufacture of intermediate goods, namely Dies, and that such Dies were treated as capital goods for the purpose of the exemption. The Explanation to the definition of inputs was applied to cover goods used in the manufacture of capital goods that are further used in the factory. Following the earlier coordinate Bench view on a similar factual pattern, the fact that the intermediate Dies were exempted did not disqualify the credit where the final products were dutiable.

Conclusion: The credit on Raw Die Blocks and Inserts was held admissible and the disallowance was set aside, in favour of the assessee.

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