Cenvat credit on structural steel allowed for capital goods fabrication, but cement used in a civil structure was denied.

Cenvat credit on MS structural items was found admissible where the evidence showed they were fabricated at site and used in the erection of conveyors, cooling bed, overhead tanks, billet pusher bed and furnaces as components or accessories of capital goods under the user test. In contrast, cement used for construction of an underground storage tank was treated as input for a civil structure and therefore did not qualify for credit in relation to capital goods or eligible manufacturing activity. The assessee succeeded on the steel items, while the cement credit was disallowed.

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Issues: (i) whether Cenvat credit was admissible on MS structural items used in fabrication and erection of conveyors, cooling bed, overhead tanks, billet pusher bed and furnaces; (ii) whether Cenvat credit was admissible on cement used for construction of an underground storage tank.

Issue (i): whether Cenvat credit was admissible on MS structural items used in fabrication and erection of conveyors, cooling bed, overhead tanks, billet pusher bed and furnaces.

Analysis: The Revenue's objection that the steel items were only supporting structures was found unsupported by evidence. The respondent produced a detailed certificate, with annexures and photographs, showing use of the items in fabrication of capital goods and their components. The items were fabricated at site and then erected and bolted to concrete footing. Applying the user test recognised for determining whether such items function as components or accessories of capital goods, the credit on the steel structural items was held to be admissible.

Conclusion: Credit on the MS structural items was upheld in favour of the assessee.

Issue (ii): whether Cenvat credit was admissible on cement used for construction of an underground storage tank.

Analysis: Cement used for constructing an underground storage tank was treated as having been used in a civil structure. Such use does not satisfy the requirement for Cenvat credit on inputs used in relation to capital goods or eligible manufacturing activity.

Conclusion: Credit on the cement was held inadmissible, in favour of Revenue.

Final Conclusion: The assessee succeeded on the structural steel credit, but the credit on cement was disallowed, leaving the Revenue with only limited success on one item.

Ratio Decidendi: Structural items used in fabrication and erection of capital goods may qualify for Cenvat credit where their use as components or accessories is established on facts, but cement used in a civil structure is not eligible.

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