Cenvat credit on goods used to make capital goods for final production was held admissible under the input definition.

Goods used in the manufacture of capital goods that were further used in making the final product qualified as inputs under Rule 2(g) of the Cenvat Credit Rules, 2002, because the definition expressly covered goods used in the manufacture of capital goods employed in the factory. On that basis, denial of Modvat/Cenvat credit was unjustified and the assessee was entitled to credit on such goods.

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Issues: Whether Modvat/Cenvat credit was admissible on goods used in the manufacture of capital goods which were themselves used in the manufacture of the final product.

Analysis: Rule 2(g) of the Cenvat Credit Rules, 2002 defined inputs to include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. On that definition, goods used for making capital goods employed in the manufacture of the final product qualified as inputs for credit purposes.

Conclusion: The denial of credit was unjustified and the assessee was entitled to Cenvat credit on the goods.

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