Capital goods credit under the narrower CENVAT definition fails for steel items used only in supporting structures.

Eligibility for CENVAT credit had to be tested against the narrower definition of capital goods in force during April to October 2003, which omitted "plant" and its components, spares and accessories. Steel items such as CTD bars, angles, channels, MS bars and joists used only for fabrication of supporting structures for an EOT crane and furnace were not components, spares or accessories of the machines under Rule 2(b) of the CENVAT Credit Rules, 2002. Earlier rulings under the wider Rule 57Q regime were inapplicable. Credit was therefore not admissible.

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Issues: Whether CTD bars, angles, channels, MS bars, joists and similar steel items used for fabrication of supporting structures for EOT crane and furnace could be treated as capital goods for the relevant period under Rule 2(b) of the CENVAT Credit Rules, 2002.

Analysis: The relevant definition of capital goods for April 2003 to October 2003 under Rule 2(b) of the CENVAT Credit Rules, 2002 was materially different from the earlier regime under Rule 57Q(1) of the Central Excise Rules, 1944. The later rule omitted the expression "plant" and also omitted components, spares and accessories of plant from the definition. The earlier decisions relied upon by the assessee and the appellate authority were rendered in the context of the wider definition under Rule 57Q, where plant had a broader coverage. In the relevant period, the items in question were only steel materials used for supporting structures and could not be treated as components, spares or accessories of the machines within the narrower definition then in force. The change in the statutory text showed a deliberate legislative intent to restrict the scope of capital goods credit.

Conclusion: The items were not eligible as capital goods under Rule 2(b) of the CENVAT Credit Rules, 2002 and the order allowing credit could not be sustained.

Ratio Decidendi: Eligibility to Cenvat credit must be determined by the definition of capital goods actually in force for the relevant period, and where the statute narrows that definition by omitting plant and its components, earlier broader rulings under a different regime do not apply.

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