Cenvat credit on steel items used to fabricate production moulds was allowed under the user test.

Cenvat credit was held admissible on MS rounds, MS pipe, plate, beam and channel used to fabricate moulds deployed in the manufacture of RCC pipes. Applying the user test, the Tribunal treated the goods as eligible inputs or components for the moulds because they were used in fabrication of items directly employed in production. Credit was not denied merely because the goods were classifiable under Chapters 72 and 73, and the disallowance was set aside.

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Issues: Whether Cenvat credit was admissible on MS Rounds, MS Pipe, Plate, Beam and Channel used in the fabrication of moulds which were in turn used in manufacture of RCC pipes.

Analysis: The items on which credit was taken were used for fabricating moulds by or on behalf of the appellant. The moulds so fabricated were admittedly used in the manufacturing process. Applying the user test, the Tribunal treated the MS items as eligible inputs/components for the moulds and held that their use for fabrication did not disentitle credit merely because they were classifiable under Chapters 72 and 73.

Conclusion: The credit on the disputed MS items was held admissible and the disallowance was set aside.

Final Conclusion: The appeal succeeded and the assessee was held entitled to Cenvat credit on the items used for fabrication of moulds.

Ratio Decidendi: Where goods are used in the fabrication of moulds that are themselves used in manufacture, eligibility to credit is determined by the user test and not solely by the tariff classification of the goods.

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