CENVAT credit on plant components used in factory manufacture remains admissible despite contractor assembly and later commissioning.

CENVAT credit was admissible on parts, components, spares and accessories of a Tail Gas Treatment Plant received in the factory under duty-paid invoices and used in the manufacture of dutiable final products. Assembly of the plant by a contractor, or its later commissioning as a unit, did not defeat credit where the statutory requirements of receipt in the factory and use in manufacture were met. The Tribunal also relied on binding precedent recognising credit on components of plant installed within the manufacturer's factory, even if the assembled plant was not itself the final product.

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Issues: Whether CENVAT credit was admissible on the parts, components, spares and accessories used in the construction and installation of the Tail Gas Treatment Plant inside the factory, and whether the departmental challenge could succeed in the face of binding precedent.

Analysis: The goods on which credit was taken were received in the factory under duty-paid invoices in the respondent's name. The plant was assembled from those parts inside the factory and was used for manufacture of the dutiable final products. The decisive requirements for capital goods credit were satisfied, namely receipt in the factory and use in the manufacture of dutiable final products. The fact that the complete plant was erected by a contractor, or that the plant was later commissioned as a unit, did not negate credit on the components and accessories. The Tribunal also treated earlier decisions on materially identical facts as binding, including the line of authority recognising credit on components of plant installed in the manufacturer's factory even where the assembled plant itself was not the final product.

Conclusion: CENVAT credit on the parts, components, spares and accessories of the Tail Gas Treatment Plant was admissible and the departmental appeal failed.

Ratio Decidendi: CENVAT credit is admissible on capital goods components received in the manufacturer's factory and used to produce dutiable final products, even if those components are assembled into a plant by a contractor and the assembled plant is not itself the final product.

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