Cenvat credit eligibility turns on actual use of steel items and aluminium conductors in machinery or supporting structures.

Cenvat credit on aluminium bars used as conductors for transmitting electricity to machinery was treated as admissible because they formed an essential part of the capital goods. Credit on CRSS coils, shapes and sections, channels, angles, plates and SS plates depended on their actual use: if used as foundation material or for fabrication of supporting structures fixed to the earth, credit was not admissible, but if used as inputs in manufacture of capital goods under the Cenvat Credit Rules, 2004, credit could be allowed. As the impugned order had not properly examined their use, the matter required fresh factual determination.

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Issues: Whether Cenvat credit was admissible on aluminum bars used for transmitting electricity from the power turbine alternator, and on CRSS coils, shapes and sections, channels, angles, plates and SS plates used in fabrication of structures and machinery-related components.

Analysis: Aluminum bars used as conductors for transmission of electricity to machinery were treated as essential parts of the machinery and therefore as capital goods eligible for credit. As to CRSS coils, shapes and sections, channels, angles, plates and SS plates, credit would not be admissible if they were used as foundation material or for fabrication of supporting structures fixed to the earth. Their eligibility depended on proof that they were used as inputs in the manufacture of capital goods under the Cenvat Credit Rules, 2004. Since the actual use of these items had not been properly examined in the impugned order, further factual determination was necessary.

Conclusion: Credit on aluminum bars was upheld. The allowance of credit on CRSS coils, shapes and sections, channels, angles, plates and SS plates was set aside and the matter was remanded for de novo decision after ascertaining their use.

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