Cenvat credit on structural support items was upheld where the goods functioned as parts of manufacturing machinery.

Cenvat credit was treated as admissible on angles, channels, beams, pipes, tubes, plates, flats, cable trays and similar items used as parts of technological structures supporting machinery in bulk drug manufacture. Rule 2(b) of the Cenvat Credit Rules, 2002 was read broadly to cover components, spares and accessories of specified capital goods, and the tariff classification of the individual items was held secondary to their actual use in the manufacturing set-up. Applying a liberal Modvat/Cenvat approach and authorities on structural and supporting items used in plant operations, the denial of credit was not sustained and the assessee's entitlement to credit was upheld.

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Issues: Whether Cenvat credit was admissible on items such as angles, channels, beams, pipes, tubes, plates, flats, cable trays and similar goods used as parts of technological structures supporting machinery in the manufacture of bulk drugs.

Analysis: The items were found, on the basis of the plant photographs and the nature of their use, to be employed as parts of technological structures connected with and supporting the manufacturing machinery. Rule 2(b) of the Cenvat Credit Rules, 2002 was read broadly to include components, spares and accessories of the specified capital goods, and the relevance of tariff classification of the individual items was held to be secondary to their actual use in the manufacturing set-up. The reasoning followed the liberal trend in Modvat/Cenvat interpretation and relied on authorities treating structural/supporting items and pipes used in plant operations as eligible for credit.

Conclusion: The denial of Cenvat credit was not sustained and the credit was held admissible in favour of the assessee.

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