Cenvat credit on supporting structures denied, but penalty not restored where the credit issue remained debatable.

Steel joists used only as supporting structures for the movement of EOT cranes were held not eligible for Cenvat credit, because goods forming part of a foundation or support do not qualify as inputs or as components, spares or accessories of machinery under the applied Larger Bench view in Vandana Global Ltd. The contrary authorities were distinguished on their statutory setting and facts, and the appellate allowance of credit was set aside. Penalty was not restored, since the credit controversy had given rise to differing Tribunal and High Court interpretations and was not free from doubt. The appeal thus succeeded only on the credit issue.

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Issues: (i) Whether steel joists used for supporting the movement of EOT cranes were eligible for Cenvat credit as inputs or capital goods. (ii) Whether penalty could be restored when the controversy had been subject to differing interpretations.

Issue (i): Whether steel joists used for supporting the movement of EOT cranes were eligible for Cenvat credit as inputs or capital goods.

Analysis: The Larger Bench view in Vandana Global Ltd. was applied to hold that goods used for foundation or supporting structures do not qualify as inputs or components, spares or accessories of machinery for credit purposes. The joists in question were found to perform only the function of a supporting structure for crane movement, and the contrary authorities relied on were distinguished as relating to a different statutory setting and factual context.

Conclusion: Credit on the joists was held to be inadmissible and the allowance made by the appellate authority was set aside.

Issue (ii): Whether penalty could be restored when the controversy had been subject to differing interpretations.

Analysis: The dispute on eligibility was not free from doubt because of differing Tribunal and High Court views on the subject. In those circumstances, restoration of penalty was considered unjustified notwithstanding the denial of credit on merits.

Conclusion: Penalty was not restored.

Final Conclusion: The department succeeded only on the credit issue relating to joists, while the relief against penalty was declined, leaving the appeal allowed only to that limited extent.

Ratio Decidendi: Goods used merely as foundation or supporting structures for machinery are not eligible for Cenvat credit as inputs or capital goods, but penalty is not warranted where the controversy admits of competing legal interpretations.

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