Cenvat credit on steel used to fabricate a rolling mill cooling bed was held admissible as input for capital goods.

Steel plates, joists and channels used to fabricate a cooling bed for a rolling mill were treated as eligible Cenvat inputs because the cooling bed formed part of the rolling mill, a capital good under Rule 2(a). As Rule 2(k) extends credit to inputs used in fabrication of capital goods for use in the factory, the steel items qualified for credit even though the cooling bed was permanently fixed to the earth. The approach was consistent with the view that steel items used in fabrication of plant components can attract credit. Credit was therefore admissible and denial of Cenvat credit was unsustainable.

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Issues: Whether steel plates, joists and channels used in fabrication of a cooling bed permanently fixed to the earth for a rolling mill were eligible for Cenvat credit as inputs used in fabrication of capital goods.

Analysis: The steel items were used to fabricate the cooling bed on which rolling takes place. The cooling bed, though fixed to the earth for installation, was treated as a component of the rolling mill, which falls under Chapter heading 84.55 and is capital goods within Rule 2(a) of the Cenvat Credit Rules. Since Rule 2(k) also covers inputs used in fabrication of capital goods for use in the factory, the steel items used for the cooling bed were regarded as eligible inputs. The decision also aligned with the view that similar steel items used in fabrication of plant components qualify for credit.

Conclusion: The credit was admissible and the denial of Cenvat credit was unsustainable.

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