Cenvat credit on steel used for supporting structures was denied, while penalty was struck down as interpretative.

Cenvat credit on M.S. angles, channels, beams, bars, plates and HR/CR coils used for supporting structures, working platforms and hand rails was held inadmissible because those items were not integral parts of plant and machinery but materials for foundations and allied structures. The retrospective effect of Notification No. 16/2009-CE(NT) was applied in line with the established credit principles, and the contrary precedent cited by the assessee was treated as inapplicable on the facts. Penalty was set aside because the dispute turned purely on interpretation of the credit rules and no separate basis for penal liability was shown.

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Issues: (i) Whether Cenvat credit was admissible on M.S. angles, channels, beams, bars, plates and HR/CR coils used for supporting structures and working platforms of machinery; (ii) whether penalty was sustainable where the dispute turned on interpretation of the credit rules.

Issue (i): Whether Cenvat credit was admissible on M.S. angles, channels, beams, bars, plates and HR/CR coils used for supporting structures and working platforms of machinery.

Analysis: The items were found to be used for supporting structures of the working platform, hand rails and allied structures, and not as integral parts of plant and machinery. The reasoning followed the line of authority that steel items used for foundations or supporting structures do not qualify as inputs or capital goods for credit purposes, and the amendment by Notification No. 16/2009-CE(NT) was treated as having retrospective effect. The contrary decision relied upon by the appellant was held inapplicable on the facts.

Conclusion: Cenvat credit on the disputed steel items was not admissible, and the order denying credit was upheld.

Issue (ii): Whether penalty was sustainable where the dispute turned on interpretation of the credit rules.

Analysis: The dispute was held to be one of interpretation of the rules, and no separate basis for penal liability was accepted.

Conclusion: Penalty was not sustainable and was set aside.

Final Conclusion: The denial of credit was sustained, but the penal component was deleted, leaving the appeal only partly successful.

Ratio Decidendi: Steel items used for supporting structures and working platforms, and not as integral parts of plant and machinery, do not qualify for Cenvat credit; where the dispute is purely interpretative, penalty is unwarranted.

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