Functional use controls Cenvat credit for plant erection materials; immovability alone does not defeat admissibility.

Cenvat credit was treated as admissible on OPC cement, MS plates, beams, angles, channels, sheets, flats, TMT rods and TOR rods used to fabricate and erect structurals supporting a dry process cement manufacturing plant. The controlling principle was the functional use of the goods in the manufacturing setup, not their classification as part of civil construction or immovable property. Mere attachment to earth was not accepted as a sufficient ground to deny credit where the materials were used for machinery support and plant erection. On that basis, the denial of credit was held unsustainable.

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Issues: Whether cenvat credit was admissible on OPC cement, MS plates, MS beams, MS angles, MS channels, MS sheets, MS flats, TMT rods and TOR rods used for construction of a dry process cement manufacturing plant, and whether the items could be denied credit on the ground that they formed part of civil construction or immovable property.

Analysis: The credit had been denied only because the materials were used in setting up the cement plant and the term "plant" was treated as outside the scope of capital goods under the Cenvat Credit Rules, 2004. The materials were used for fabrication and erection of structurals supporting the machinery, and the record did not show any independent basis to deny credit merely because the structures were fixed to earth. The decision followed earlier rulings in the assessee's own cases and similar matters, where it was held that the decisive consideration is the functional use of the goods in the manufacturing setup and not whether the structures are immovable. Immovability by itself was not treated as a valid ground to deny cenvat credit.

Conclusion: Cenvat credit was admissible to the assessee, and the denial of credit was unsustainable.

Ratio Decidendi: Materials used for fabrication and erection of structurals essential to a manufacturing plant can qualify for cenvat credit where their functional use in the manufacturing process is established, and mere attachment to earth or immovable character does not by itself bar credit.

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