CENVAT credit on accessory assemblies cleared with the final product cannot be denied for lack of direct manufacture use

CENVAT credit was admissible on a mixer-grinder assembly received by a manufacturer, because the invoice showed it was received as an assembly and not as free goods or refrigerator parts. The goods were unpacked, completed by fixing the power cord and wiring harness, and cleared along with refrigerators in a common pack on which duty was paid on the composite price. On these facts, the mixer-grinder formed part of the accessories cleared with the final product, so credit could not be denied merely because it was not directly used in manufacture. The denial of credit was therefore unsustainable.

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Issues: Whether CENVAT credit was admissible on mixer-grinder assembly received by the manufacturer and cleared along with refrigerators in a composite pack.

Analysis: The invoice description was clarified to show that the mixer-grinder was received as assembly and not as free goods or as refrigerator parts. The goods were received, unpacked, completed by fixing the power cord and wiring harness, and then cleared together with the refrigerator in a common pack on which duty was paid on the composite price. In these circumstances, the mixer-grinder formed part of the accessories cleared along with the final product, and the credit could not be denied merely because the department treated it as not used in manufacture.

Conclusion: CENVAT credit on the mixer-grinder assembly was held admissible and the denial of credit was unsustainable.

Ratio Decidendi: Where an accessory is duty-paid, received as part of a composite pack with the final product, and cleared together with that final product, credit cannot be denied solely on the ground that it is not directly used in manufacture.

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