CENVAT credit on capital goods for a lessee was upheld where prescribed procedure and binding precedent supported the claim.

A lessee of capital goods was entitled to take CENVAT credit where the goods were received under a leave and licence arrangement and the prescribed procedure was followed. The tribunal relied on prior decisions, a binding jurisdictional precedent on identical facts, and a clarificatory Board communication supporting credit on dies, moulds and transferred capital goods. In the absence of any contrary authority, the departmental challenge to denial of credit was rejected and the first appellate order allowing credit was left undisturbed.

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Issues: Whether a lessee of capital goods is eligible to avail CENVAT credit on such capital goods.

Analysis: The impugned order allowing credit was supported by earlier tribunal decisions and by the jurisdictional High Court on an identical set of facts. The Board's clarificatory communication also indicated that credit on dies and moulds/capital goods transferred to a job worker could be availed if the prescribed procedure was followed. In the absence of any contrary authority and in view of the binding jurisdictional decision, no ground was found to interfere with the first appellate order.

Conclusion: The assessee was held entitled to avail CENVAT credit on the capital goods received under the leave and licence arrangement.

Final Conclusion: The departmental challenge to the credit claim failed, and the assessee's supporting cross appeal did not require separate relief.

Ratio Decidendi: Where an identical issue has been answered by the jurisdictional High Court and the relevant procedural requirements are satisfied, CENVAT credit on capital goods used by a lessee cannot be denied.

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