Cenvat credit on steel items used in machinery erection and maintenance was upheld as eligible capital goods.

Steel items such as M.S. plates, channels, H.R. sheets, tor steel, joists, coils, CTD bars, flat steel, shapes, sections and slide slitting were treated as capital goods where they were used for erection, fabrication, strengthening, repair and maintenance of machinery in sugar manufacture. On those facts, the items were regarded as components, spares or accessories of machinery falling under Chapter 84, making Cenvat credit admissible under Rule 2(b)(iii) of the Cenvat Credit Rules, 2002. Prior Tribunal rulings on similar steel goods supported the view that materials essential to plant and machinery form part of the manufacturing process, and the assessee succeeded on credit eligibility.

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Issues: Whether Cenvat credit was admissible on M.S. plates, M.S. channels, H.R. sheets, Tor steel, R.S. joists, H.R. coils, CTD bars, flat steel, shapes and sections, and H.R. slide slitting as capital goods under Rule 2(b)(iii) of the Cenvat Credit Rules, 2002.

Analysis: The items were shown to have been used for erection, fabrication, strengthening, repair and maintenance of machinery and equipment employed in the manufacture of sugar and molasses. On the facts, they were treated as components, spares or accessories of machinery falling within Chapter 84, and therefore as eligible capital goods. The decision was supported by prior Tribunal decisions on similar steel items and by the view that MS/SS plates essential to plant and machinery form an integral part of the manufacturing process.

Conclusion: The Cenvat credit was held admissible and the assessee succeeded on the issue.

Final Conclusion: The appeal was allowed because the disputed steel items were held to qualify for Cenvat credit as capital goods used in the manufacture of the final products.

Ratio Decidendi: Where steel items are specifically shown to be used as components, spares or accessories in the erection, fabrication or maintenance of machinery used in manufacture, they qualify as capital goods for Cenvat credit purposes.

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