Cenvat credit on cement for machinery foundations denied as building material, not input or capital goods under the rules.

Cement used to construct the foundation for machinery was treated as a building material, not as an input used in or in relation to manufacture of the final product, and the foundation did not qualify as capital goods under Rule 2(b) of the Cenvat Credit Rules, 2002. Explanation II to Rule 2(g) was held not to extend credit eligibility to cement used for such construction. On that basis, Cenvat credit on cement used for machinery foundations was found unavailable, the assessee's claim was rejected, and the Tribunal's order allowing credit was reversed.

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Issues: Whether cement used in constructing the foundation for machinery could be treated as an input or capital goods so as to qualify for Cenvat credit under the Cenvat Credit Rules, 2002.

Analysis: Cement used for laying the foundation of machinery was held to be a building material and not an input used in or in relation to manufacture of the final product. The foundation constructed with cement was also held not to fall within the definition of capital goods under Rule 2(b), and Explanation II to Rule 2(g) did not extend credit eligibility to cement used for such construction. On this reasoning, credit was found to be unavailable on cement used in the foundation of machinery.

Conclusion: The assessee was not entitled to Cenvat credit on cement used for constructing machinery foundations, and the disallowance of credit was upheld.

Final Conclusion: The Tribunal's order allowing credit was reversed and the assessment order as affirmed in appeal was restored.

Ratio Decidendi: Cement used as a building material for constructing machinery foundations is neither an input nor capital goods for the purpose of Cenvat credit under the Cenvat Credit Rules, 2002.

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