CENVAT credit on fabrication materials required verification of actual use before denial, with remand for fresh adjudication.

Entitlement to CENVAT credit on iron and steel items depended on verification of their actual use in fabrication of components and structural supports in the manufacturing process. As the record indicated possible use in furnace shells, electrodes mantles, pressure rings, conveyor galleries, supports and hoppers, denial of credit without proper factual verification was unsustainable. The matter was therefore remanded for de novo adjudication, with the original authority directed to examine actual usage and give the assessee a fair opportunity to produce supporting evidence, including a Chartered Engineer's certificate, before deciding the claim.

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Issues: Whether the denial of CENVAT credit on iron and steel items used in fabrication of components and structural supports could be sustained without proper verification of their actual use, and whether the matter required remand for fresh adjudication.

Analysis: The dispute turned on whether the impugned goods were used as components or structural items in the manufacture process, as alleged by the assessee, or were ineligible items. The lower authority rejected the claim mainly for want of documentary proof of actual usage, while the appellate authority also proceeded on that basis. The record showed that the assessee's statement had indicated use of the goods in fabrication of furnace shell, electrodes mantle, pressure rings, conveyor galleries, supports and hoppers. In these circumstances, the factual question of actual use required verification. The assessee was also to be given an opportunity to produce supporting material, including a Chartered Engineer's certificate, before final determination.

Conclusion: The matter was remanded to the original authority for de novo adjudication after verifying the actual usage of the goods and after granting reasonable opportunity to the assessee to produce evidence.

Final Conclusion: The appellate challenge succeeded only to the extent that the denial of credit was set aside and the dispute was sent back for fresh decision on facts and evidence.

Ratio Decidendi: Where entitlement to CENVAT credit depends on the factual use of goods in manufacture, the authority must verify actual usage and decide the claim after giving the assessee a fair opportunity to adduce evidence.

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