Cenvat credit on steel items for foundations and supporting structures is inadmissible when used only for embedded machinery support.

MS channels, angles, beams, plates and bars used to fabricate foundations, supporting structures and enclosures for plant and machinery were treated as items used for embedded structural work, not as capital goods or inputs used in or in relation to manufacture. The stated principle is that goods used for laying foundations or constructing supporting structures embedded in the earth do not qualify for Cenvat credit for the relevant period. On that basis, the credit was held inadmissible and the order allowing it unsustainable; the Revenue's appeal succeeded and denial of credit was restored.

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Issues: Whether Cenvat credit was admissible on MS channels, angles, beams, plates, bars and similar items used for fabrication of foundation, supporting structures and enclosures for plant and machinery in the factory.

Analysis: The items were used only for fabrication of structures embedded in the earth to provide support to machinery or enclosures containing machinery. Such foundation and supporting structures do not constitute capital goods or inputs used in or in relation to the manufacture of final products. Goods used for laying foundations and building supporting structures are not eligible for credit under the Cenvat scheme for the relevant period.

Conclusion: Cenvat credit on the impugned goods was not admissible and the order allowing credit was unsustainable.

Final Conclusion: The appeal by the Revenue succeeded and the denial of credit was restored with consequential relief.

Ratio Decidendi: Goods used for laying foundation and constructing supporting structures embedded to the earth are not inputs or capital goods for the purpose of Cenvat credit.

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