CENVAT credit on structural steel for support structures of capital goods is allowed under the user test.

Structural steel items used to fabricate support structures for machinery and other capital goods within the factory were held eligible for CENVAT credit because the support structures were necessary for the effective functioning of those machines. Applying the user test, the fabricated structures were treated as parts of the relevant machinery and therefore within the scope of capital goods under the CENVAT Credit Rules. The contrary view denying credit on similar items was distinguished, as structural items used for support structures of capital goods qualify for credit on the settled position stated in the text.

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Issues: Whether CENVAT credit was admissible on structural steel items used for fabrication of support structures for capital goods within the factory premises.

Analysis: The structural steel items were used to fabricate support structures for machinery and other capital goods, and such support structures were necessary for the effective functioning of those machines. Applying the user test, goods so fabricated were treated as parts of the relevant machinery and thus within the scope of capital goods under the CENVAT Credit Rules. The prior view denying credit on similar items was distinguished in light of the settled position that such structural items, when used for support structures of capital goods, qualify for credit.

Conclusion: The structural steel items used for fabrication of support structures were eligible for CENVAT credit.

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