Cenvat credit on aluminium inputs upheld where manufacturing use was supported and denial lacked contrary evidence.

Aluminium articles used in the manufacture of ferro-alloy were treated as inputs for Cenvat purposes where the record showed their use at different stages of the process, including in relation to spent catalyst. The consumption table and the director's statements supported the explanation that different aluminium forms were used initially and later, and the Department produced no material to disprove their use in manufacture or to show that the purchased aluminium was not an input. On that basis, the denial of Cenvat credit and the associated penalties were held unsustainable, and the assessee succeeded.

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Issues: Whether aluminium articles used in the manufacturing process qualified as inputs so as to entitle the appellant to Cenvat credit, and whether the demand and penalties could be sustained.

Analysis: The credit dispute turned on whether the aluminium items were actually used as part of the spent catalyst in producing ferro-alloy. The record, including the consumption table and the director's statements, showed that different aluminium forms were used at different stages of the process and explained why rods were used initially and other forms later. The Department did not produce material to disprove use in manufacture or to establish that the purchased aluminium was not an input. In these circumstances, the aluminium articles fell within the definition of input for Cenvat purposes and the basis for denial of credit and imposition of penalty was unsustainable.

Conclusion: The issue was decided in favour of the assessee; the disallowance of Cenvat credit and the penalties were set aside.

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