Cenvat credit on cement for machinery foundations denied as it is not capital goods or an input under the rules.

Cement used for foundations or supporting structures for machinery is treated as a building material, not as capital goods or an input for Cenvat credit. Applying the cited High Court view, cement used in such construction does not fall within Rule 2(b) of the Cenvat Credit Rules, 2002, and is also outside Rule 2(g); the same reasoning was followed under the materially similar 2004 Rules. Credit was therefore denied and the issue was answered against the assessee and in favour of Revenue.

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Issues: Whether cement used for foundation or supporting structure for machinery can be treated as capital goods for the purpose of Cenvat credit under the Cenvat Credit Rules, 2002 and 2004.

Analysis: The reference was answered by applying the view that cement is a building material used for construction of foundation and is not an input used in manufacture of the final product. The cited High Court ruling held that cement used in foundation for machinery does not fall within the definition of capital goods under Rule 2(b) of the Cenvat Credit Rules, 2002, and also cannot be treated as an input under Rule 2(g). Since the relevant provision under the 2002 Rules was treated as materially similar to the corresponding provision under the 2004 Rules, the same conclusion was adopted for the reference.

Conclusion: Cement used for foundation or supporting structure for machinery is not eligible for Cenvat credit as capital goods; the issue is answered against the assessee and in favour of Revenue.

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