CENVAT credit on maintenance materials allowed where factory records sufficiently proved use in repair of capital goods

CENVAT credit was held admissible on MS channels, angles, plates, joists and similar materials used in the factory for maintenance and repair of capital goods, because materials employed for fabrication, repair or upkeep of capital goods could qualify when their use was satisfactorily established. Invoice-wise records from the finance department showing receipt and allocation of the materials to different divisions supported the claim. Exact one-to-one identification of each item with a specific machine part was not required, since such granular correlation is often impracticable in a factory environment without sophisticated inventory tracking. On the facts, the use of the materials in the factory for maintenance of capital goods was sufficiently proved.

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Issues: Whether CENVAT credit was admissible on MS channels, angles, plates, joists and similar materials used in the factory for maintenance and repair of capital goods, and whether the assessee had sufficiently proved such use.

Analysis: The credit claim was examined in the context of the settled position that, for the period in question, materials used in fabrication, repair or maintenance of capital goods in the factory could qualify for credit if their use was satisfactorily established. The documents produced by the assessee's finance department contained invoice-wise particulars showing receipt and allocation of the materials to different divisions for repair and maintenance. The absence of exact one-to-one identification of each item with a specific machine part was held not fatal, because such granular correlation is ordinarily impracticable in a factory setting unless sophisticated inventory tracking exists. On the facts, the materials were found to have been used in the factory for maintenance of capital goods.

Conclusion: CENVAT credit was admissible and the assessee succeeded on the issue.

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