CENVAT credit on steel items and welding electrodes allowed where used to fabricate capital goods components

CENVAT credit was held admissible on steel plates, angles, channels, welding electrodes and storage racks used to fabricate capital goods and their parts and components. The Tribunal accepted that the materials were deployed for making items such as raw mill hopper, conveyor systems, transfer tower, boiler parts and grating material, and followed its earlier order allowing credit on similar inputs. Authorities cited against the claim were treated as inapplicable on the facts, and the denial of credit was found unsustainable.

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Issues: Whether CENVAT credit was admissible on steel plates, angles, channels, welding electrodes and storage racks used for fabrication of capital goods and parts and components thereof.

Analysis: The items in dispute were shown by the records to have been used for fabrication of raw mill hopper, belt conveyor systems, transfer tower, boiler parts, grating material and other machinery-related components. The Tribunal noted that the appellant's own earlier order had allowed credit on similar items and that the judicial authorities relied upon by the assessee supported credit where the materials were used for manufacture of components, parts and accessories of capital goods. The contrary authorities cited by Revenue were held to be inapplicable on the facts and in the light of the later judicial position followed by the Tribunal.

Conclusion: CENVAT credit on the disputed steel items, welding electrodes and storage racks was admissible, and the denial of credit was unsustainable.

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