Modvat/Cenvat credit on structural items used to support and stabilise machinery is available when integral to production.

Structural items such as plates, angles, channels and beams used to fabricate, fit or stabilise production machinery can qualify for Modvat/Cenvat credit when they are integrally connected with manufacture and are necessary to keep the machinery functioning properly without vibration or movement. The settled principle applied is that such items may be treated as capital goods for credit purposes where the statutory test is satisfied. On that basis, credit was available on the impugned items.

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Issues: Whether the assessee was entitled to Modvat/Cenvat credit on structural items such as plates, angles, channels, beams and similar items used in connection with machinery and production facilities.

Analysis: The issue was governed by the principle that items used in the fabrication or support of machinery, and which are necessary to make the machinery function properly without vibration or movement, can qualify as capital goods for credit purposes when they are integrally connected with production. The Court noted that the point had already been settled by the Supreme Court in relation to similar steel plates and M.S. channels used in fabrication of machinery-related structures, and the same approach had been applied in the assessee's own earlier matter.

Conclusion: The assessee was entitled to avail Modvat credit on the impugned items.

Ratio Decidendi: Structural items that are functionally used in the fabrication, fitting or stabilization of production machinery, and are integrally connected with manufacture, qualify for credit as capital goods where the statutory test is satisfied.

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