Cenvat credit on factory storage racks allowed where the racks had a direct nexus with manufacturing operations and raw material storage.

Steel racks used within the factory for storing material were held to have a direct nexus with manufacturing operations and raw material storage, so they qualified as goods used in the factory for business and manufacture. The Tribunal followed earlier decisions and the Board circular recognising similar items used within factory premises as eligible inputs, and held that Cenvat credit was admissible. The denial of credit was therefore not sustainable, and the assessee was entitled to the claimed benefit.

---

---

Issues: Whether Cenvat credit was admissible on steel racks used for storage within the factory premises.

Analysis: The disputed steel racks were used in the factory for storing material, and the issue was treated as covered by earlier Tribunal decisions holding that storage racks used in the manufacturing premises form part of the manufacturing activity. Reliance was placed on the principle that goods used within the factory in connection with business and manufacture are eligible for credit, supported by the Board circular recognising furniture and similar items used in an office within the factory as goods used in the factory. The Tribunal followed the earlier view that items having direct nexus with factory operations and raw material storage are cenvatable.

Conclusion: Cenvat credit on the steel racks was admissible and the issue was answered in favour of the assessee.

Final Conclusion: The denial of credit could not be sustained, and the assessee was entitled to the benefit claimed.

Ratio Decidendi: Goods used within the factory and having a direct nexus with manufacturing operations, including storage facilities integral to production, qualify for Cenvat credit.

---