Cenvat credit on essential plant accessories allowed for asbestos gasket sheets used in gas and steam equipment connections.

Asbestos gasket sheets used to connect equipment through which gas and steam pass were treated as eligible for Cenvat credit under the definitions of input and capital goods in the Cenvat Credit Rules, 2001. The material was used in the plant as an essential adjunct to the main manufacturing setup, and the settled principle applied was that accessories and supplementary items necessary for the functioning or maintenance of manufacturing plant may qualify for credit even if they are not directly involved in the primary manufacturing process. On that basis, the credit claim was accepted and the revenue challenge failed.

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Issues: Whether asbestos gasket sheets used for connecting equipment through which gas and steam pass are eligible for Cenvat credit as input or capital goods.

Analysis: The credit claim was examined in the light of the definition of input and capital goods under the Cenvat Credit Rules, 2001. The material was used in the assessee's plant for the passage of gas and steam and was treated as an essential adjunct to the main plant. Applying the settled principle that accessories and supplementary items necessary for the functioning and maintenance of manufacturing plant may qualify for credit even if they are not directly engaged in the primary manufacturing operation, the item was held to fall within the credit scheme.

Conclusion: The asbestos gasket sheets were eligible for Cenvat credit, and the revenue appeal failed.

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