Cenvat credit on capital goods upheld where items were integral to erection, installation, and functioning of manufacturing machinery.

Cenvat credit was admissible on disputed goods because the items, examined through invoices and accounts, fell within the definition of capital goods under Rule 2(a) and were not merely structural materials. The appellate finding treated the goods as having a functional connection with the manufacturing apparatus and as essential to the erection, installation, and effective working of plant and machinery. On that basis, denial of credit was not justified and was set aside in substance.

---

---

Issues: Whether Cenvat credit was admissible on the disputed goods as capital goods or inputs under Rule 2(a) of the Cenvat Credit Rules, 2004.

Analysis: The disputed goods included both items used as capital goods and structural items used in erection and installation of machinery. The finding of the appellate authority, based on the invoices and accounts, was that the items fell within the definition of capital goods and that the denial of credit on the premise that they were merely structural items was not justified. The items were treated as having a functional connection with the manufacturing apparatus and as essential for the effective working of the plant and machinery.

Conclusion: Cenvat credit was held admissible on the disputed goods and the denial of credit was not sustained.

Ratio Decidendi: Goods used as components of, or essential to the erection, installation, and effective functioning of manufacturing machinery can qualify as capital goods or inputs for Cenvat credit purposes when they fall within the statutory definition and are shown to be integral to manufacturing activity.

---