CENVAT credit on capital goods used to set up an immovable plant remains admissible despite the plant being non-excisable.

CENVAT credit was held admissible on machinery and equipment received in the manufacturer's factory and used to set up a sugar plant, because the goods qualified as capital goods received under cenvatable invoices and were used in relation to manufacture of final products. Credit could not be denied merely because the assembled plant became an immovable property and was not itself excisable. The distinction between excisability of immovable property and entitlement to credit under the CENVAT Credit Rules, 2002 meant that the separate line of cases on immovable property did not control the credit claim.

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Issues: Whether CENVAT credit was admissible on machinery and equipment received in the assessee's factory and used to set up a sugar plant that became an immovable property and was not itself excisable.

Analysis: The relevant rules allowed credit on capital goods received in the factory and used in or in relation to manufacture of final products. The equipment was received under cenvatable invoices in the assessee's name, was treated by the notice itself as capital goods, and was used in the factory for setting up a plant for manufacturing the final products. The fact that the plant assembled from those goods was not excisable as an immovable property did not take away the statutory entitlement to credit on the capital goods. The decisions dealing only with excisability of immovable property did not govern the separate question of credit under the CENVAT Credit Rules, 2002.

Conclusion: CENVAT credit was admissible to the assessee on the machinery and equipment used in the factory for setting up the sugar plant.

Ratio Decidendi: Where capital goods are received in the manufacturer's factory and are used in or in relation to manufacture of final products, CENVAT credit cannot be denied merely because those goods are assembled into an immovable plant that is not itself excisable.

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