Cenvat credit on plastic crates and trays denied where items served only as factory material handling equipment.

Plastic crates and PP sheet trays used only for storing and handling raw materials, sub-assemblies and finished goods within the factory were not "inputs" under the Cenvat Credit Rules because they functioned as material handling equipment and were not consumed or substantially used up in manufacture. The Tribunal held that the definition of input could not be extended to goods ordinarily treated as capital goods, and it followed its earlier view on similar handling materials while distinguishing cases where the items were consumed in production or lost utility during use. Cenvat credit on this basis was therefore not admissible.

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Issues: Whether plastic crates and PP sheet trays used in the factory for storing and handling raw materials, sub-assemblies and finished goods were eligible for Cenvat credit as inputs under the Cenvat Credit Rules.

Analysis: The items were used only as material handling equipment and not as goods that were consumed or substantially used up in the manufacture of final products. The expression "input" under the Cenvat credit scheme cannot be stretched to cover goods conventionally treated as capital goods. The Tribunal also followed its earlier view that similar plastic crates used for handling materials within the factory were not inputs, and distinguished decisions where the items concerned were consumed in the manufacturing process or lost their utility during use.

Conclusion: The crates and trays were not inputs and Cenvat credit on that basis was not admissible. The Revenue's appeal succeeded and the assessee's appeal failed.

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