Cenvat credit on captive mining equipment was allowed where vehicles formed part of the material handling system.

Dumpers, tippers, truck chassis and similar vehicles used within a captive mine to move mined ore from the mine base to the stockyard were treated as part of the material handling system, not as ordinary transport vehicles. Because they functioned integrally in place of a conveyor or comparable lifting arrangement, the equipment was regarded as capital goods or accessories eligible for Cenvat credit. The Revenue's challenge failed, and credit was held admissible on the basis of the equipment's use in the captive mining and material-handling process.

---

---

Issues: Whether Cenvat credit was admissible on dumpers, tippers, truck chassis and vehicles used in the captive mining area for transporting mined ore from the mine base to the stockyard, and whether such equipment could be treated as capital goods or as part of the material handling system.

Analysis: The disputed equipment was used within the mine area to move mined ore to the surface stockyard before the ore was taken to the factory for manufacture of dutiable goods. The use was not as ordinary vehicles but as an integral part of the material handling arrangement in place of a conveyor or similar lifting system. In these circumstances, the equipment was treated as part of the material handling system and as falling within the scope of capital goods for the purpose of Cenvat credit.

Conclusion: The Cenvat credit was admissible and the Revenue's challenge failed.

Ratio Decidendi: Equipment used integrally as part of a material handling system for moving raw material within the captive mine area can qualify for Cenvat credit as capital goods or their accessories.

---