Cenvat credit on factory railway sleepers upheld where internal transport of raw materials and finished goods was integral to manufacture.

Cenvat credit on concrete sleepers used with railway tracks inside the factory for movement of raw materials and finished goods was admissible because the items were used in or in relation to manufacture and formed an essential, integrally connected part of the manufacturing activity. The Tribunal relied on earlier decisions allowing credit on railway tracks and sleepers within factory premises, and held that the contrary denial was not sustainable. The Revenue's challenge to the allowance of credit therefore failed.

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Issues: Whether Cenvat credit was admissible on concrete sleepers used within the factory for movement of materials and goods, and consequently whether the Revenue's appeal against allowance of such credit was liable to succeed.

Analysis: The credit dispute turned on whether the disputed items were used in or in relation to manufacture. The Tribunal noted that concrete sleepers were used along with railway tracks laid within the factory for transportation of raw materials and finished goods, making them an essential and integrally connected part of the manufacturing activity. The reasoning adopted by the Commissioner (Appeals) was consistent with earlier decisions allowing credit on railway tracks and sleepers used within the factory premises. In view of the binding and persuasive precedents relied on, the denial of credit on this item was not sustainable.

Conclusion: Cenvat credit on the concrete sleepers was held admissible, and the Revenue's challenge to the grant of credit failed.

Ratio Decidendi: Goods used within the factory for internal transportation of raw materials and finished products, and which are essential and integrally connected with manufacture, qualify for Cenvat credit.

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