CENVAT credit for maintenance gases upheld where goods were integrally connected with manufacturing activity and repairs

Oxygen gas and acetylene gas used for repairs and maintenance of plant and machinery were held eligible for CENVAT credit as capital goods under Rule 2(a)(A)(iii) of the CENVAT Credit Rules, 2004. The Rajasthan HC applied an earlier Division Bench view that goods used in a process integrally connected with manufacture, and necessary for effectively carrying on manufacturing activity, fall within the scope of capital goods for credit purposes. On that settled principle, the Court found no basis to deny credit for gases used in maintenance and answered the issue in favour of the assessee.

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Issues: Whether oxygen gas and acetylene gas used for repairs and maintenance of plant and machinery are eligible for CENVAT credit as capital goods under Rule 2(a)(A)(iii) of the CENVAT Credit Rules, 2004.

Analysis: The issue was treated as covered by the earlier Division Bench ruling holding that goods used in a process integrally connected with manufacture, and necessary for effectively carrying on the manufacturing activity, fall within the scope of capital goods for the purpose of credit. The Court applied that settled view to the present controversy and found no basis to take a different view on the eligibility of oxygen gas and acetylene gas used for repairs and maintenance.

Conclusion: The issue was answered in favour of the assessee, and the appeal was allowed.

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