Cenvat credit on plant accessories: items integral to maintenance and material handling were treated as eligible capital goods.

Rope asbestos, graphite asbestos and wire rope used in a cement plant were treated as capital goods or accessories eligible for Cenvat credit under the erstwhile Cenvat Credit Rules, 2001. The items were used for sealing joints, ducts and chutes, and the wire rope functioned as a hoist in the raw mill, cement mill and packing plant for material handling. Because they supported maintenance and efficient operation of the manufacturing machinery and were integral to manufacturing activity, they could not be excluded merely because they were not the main production equipment. The assessee was therefore entitled to Cenvat credit on the disputed items.

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Issues: Whether rope asbestos, graphite asbestos and wire rope used in the assessee's cement manufacturing plant qualified as capital goods or accessories for availing cenvat credit under the erstwhile Cenvat Credit Rules, 2001.

Analysis: The goods were used for sealing joints, ducts, chutes and similar parts of the plant and machinery, and wire rope was used as a hoist in the raw mill, cement mill and packing plant for handling materials. These items formed part of the maintenance and efficient operation of the manufacturing machinery and were integral to the manufacturing activity. On these facts, the machinery used in relation to such items could not be excluded from the scope of capital goods merely because the items were not directly the main production equipment.

Conclusion: The assessee was entitled to cenvat credit on the disputed items.

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