Cenvat credit on structural steel and electrodes depends on proof of receipt, storage and factory use.

Cenvat credit on structural steel items, electrodes and similar disputed goods may be available when they are used in fabrication, repair, maintenance or manufacture of capital goods deployed in production. Entitlement, however, depends on the assessee proving actual receipt, storage and consumption of the goods in the factory for manufacture of final or intermediate products. Mere absence of an indication at the stage of availing exemption is not, by itself, sufficient to deny credit if substantive eligibility otherwise exists. As the record did not conclusively establish receipt and use, further verification of the supporting records and returns was required and the denial of credit was not sustained outright.

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Issues: Whether Cenvat credit was admissible on the disputed items claimed as inputs or capital goods used in the manufacture of final products, and whether the denial of credit could be sustained without proof of receipt, storage, and utilization in the factory.

Analysis: The disputed goods, including structural steel items and electrodes, were examined in the light of settled precedent holding that such items may qualify for credit when used in fabrication, repair, maintenance, or manufacture of capital goods deployed in production. The entitlement, however, was treated as conditional upon the assessee establishing that the goods were actually received, stored, and consumed in the factory for manufacture of final or intermediate products. Mere absence of an indication at the time of availing exemption was held not to be a sufficient ground to deny credit if the substantive entitlement otherwise exists. As the available record did not permit a conclusive finding on actual receipt and use, further verification of the supporting records and returns was considered necessary.

Conclusion: The denial of Cenvat credit was not sustained outright, and the matter was sent back for fresh examination on production of reasonable proof of receipt and utilization of the disputed items.

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