Cenvat credit on integral plant and machinery materials upheld where binding precedent supported eligibility over contrary Tribunal reliance.

Goods used in connection with plant, machinery and factory foundations may qualify for Cenvat credit as capital goods or inputs where they form an integral part of the manufacturing apparatus or satisfy the user test. The Madras HC held that binding jurisdictional precedent supporting such eligibility could not be displaced merely by relying on the contrary Larger Bench view in Vandana Global Limited. The Tribunal was therefore not justified in denying credit on that basis, and the denial of Cenvat credit was set aside in favour of the assessee.

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Issues: Whether the assessee was entitled to Cenvat credit on goods used in the machinery and foundations of the factory as capital goods or inputs, and whether the Tribunal was justified in relying on the Larger Bench decision in Vandana Global Limited to deny such credit.

Analysis: The appeal concerned denial of Cenvat credit on structurals and allied materials used in connection with plant and machinery for manufacture. The Court noted that the jurisdictional Division Benches had already held that goods used to support, hold, or form an integral part of plant and machinery may qualify as capital goods or inputs for Cenvat credit purposes. It further held that the ratio of the Supreme Court decisions on the user test and integral connection with capital goods supported the assessee's claim, and that the Tribunal ought not to have denied credit solely on the basis of Vandana Global Limited when binding High Court precedent had already covered the issue.

Conclusion: The assessee was entitled to Cenvat credit and the Tribunal's order was set aside; the issue was answered in favour of the assessee and against the Revenue.

Final Conclusion: The appeal succeeded, and the denial of Cenvat credit was reversed in light of binding precedent recognising credit eligibility for materials forming an integral part of plant and machinery.

Ratio Decidendi: Where goods used in relation to plant and machinery constitute an integral part of the capital goods or satisfy the user test, they may qualify for Cenvat credit as capital goods or inputs, and a Tribunal cannot disregard binding jurisdictional precedent by relying only on a contrary Larger Bench view.

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