CENVAT credit on structural steel support denied, while pre-fabricated tower structures justified only partial pre-deposit relief.

Steel used merely to fabricate structural support for raw mill, silo and packing plant was treated as not prima facie qualifying as capital goods or as components, parts or accessories under the CENVAT Credit Rules, so credit on that category was held inadmissible at the interim stage. By contrast, pre-fabricated steel structures used in assembling the pre-heater tower were viewed as having a different prima facie character because they were classified under Chapter 84 and duty had been paid, so the pre-deposit requirement was confined to the balance dispute. The appellant was directed to deposit Rs.33,00,000, with waiver and stay granted for the remaining demand on compliance.

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Issues: (i) Whether steel items used to fabricate structural support to raw mill, silo, packing plant and similar machinery were eligible for CENVAT credit as capital goods or their components, parts or accessories. (ii) Whether the pre-fabricated steel structures used in assembling the pre-heater tower entitled the appellant to waiver of the entire pre-deposit demand at the interim stage.

Issue (i): Whether steel items used to fabricate structural support to raw mill, silo, packing plant and similar machinery were eligible for CENVAT credit as capital goods or their components, parts or accessories.

Analysis: The definition of capital goods under Rule 2(a)(A) of the CENVAT Credit Rules, 2004 was read with the principle that structural support to machinery is not itself a part or component of the machinery. The reasoning followed the view that items used only for fabrication of supporting civil or structural frameworks do not fall within the covered components, parts or accessories of capital goods.

Conclusion: CENVAT credit on steel items used for structural support to raw mill, silo, packing plant and similar machinery was held prima facie not admissible.

Issue (ii): Whether the pre-fabricated steel structures used in assembling the pre-heater tower entitled the appellant to waiver of the entire pre-deposit demand at the interim stage.

Analysis: The pre-fabricated steel structures were treated as having a different prima facie character from mere support steel, because they were classified under Chapter 84 and paid duty accordingly. On that basis, a substantial part of the disputed credit was seen as prima facie available, justifying only a limited pre-deposit for the balance demand.

Conclusion: The appellant was directed to pre-deposit Rs.33,00,000/- and was granted waiver and stay for the balance on compliance.

Final Conclusion: Interim relief was granted only in part, with partial protection against recovery after deposit of the amount directed.

Ratio Decidendi: Steel used merely to fabricate structural support to machinery does not prima facie qualify as capital goods or their components, parts or accessories, while interim relief may be confined to the portion of demand not covered by such support steel.

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