CENVAT credit on goods merely procured and exported is inadmissible absent use in or relation to manufacture.

CENVAT credit is not available on goods merely procured and exported when they are not used in or in relation to manufacture of the final products. Rule 2(k) limits "input" to goods with a manufacturing nexus, and the goods here were found to have been exported without such use. Rule 16 cannot be invoked to sustain the credit, because the words "for any other reason" must be read in the context of goods brought for remaking, refining or re-conditioning and cannot be expanded beyond that setting. Credit on such export-only goods therefore falls outside the CENVAT scheme.

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Issues: Whether CENVAT credit was admissible on goods procured by the assessee and exported from the factory when such goods were not used in or in relation to manufacture of the final products, and whether Rule 16 of the CENVAT Credit Rules, 2004 could be invoked to sustain such credit.

Analysis: Rule 2(k) of the CENVAT Credit Rules, 2004 confines "input" to goods used in or in relation to the manufacture of final products. The goods in question were found to have been merely procured and exported, and were not established to have been used in the manufacturing process. Rule 16 of the CENVAT Credit Rules, 2004 was held inapplicable because the expression "for any other reason" has to be read in the context of goods brought for being remade, refined or re-conditioned, and cannot be extended by a broad reading divorced from that setting. On this reasoning, credit taken on goods procured solely for export was held to fall outside the CENVAT scheme.

Conclusion: The credit was held to be inadmissible and the Revenue's appeal was allowed.

Ratio Decidendi: CENVAT credit cannot be availed on goods merely procured and exported unless they satisfy the definition of "input" by being used in or in relation to manufacture, and the residuary words in Rule 16 cannot be expanded beyond the class of goods contemplated by that rule.

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