Cenvat credit on MS structural items allowed for machinery supports, but denied for use in constructing a canteen shed.

Cenvat credit on MS angles, channels, beams and plates used for fabrication of support structures, bridges, cable trays and allied installations connected with capital goods and plant machinery was admissible because such structural supports were necessary for the functioning of machinery and for fabrication of capital goods, parts and accessories. Credit was therefore allowed on the industrial use of the MS items. Cenvat credit on the same items used for construction of a canteen shed was outside the eligible capital goods-related use, so the attributable credit had to be reversed. Credit was denied to that extent.

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Issues: (i) whether Cenvat credit was admissible on MS angles, channels, beams and plates used for fabrication of support structures and allied installations connected with capital goods and plant machinery; (ii) whether Cenvat credit was admissible on the same items used for construction of a canteen shed.

Issue (i): whether Cenvat credit was admissible on MS angles, channels, beams and plates used for fabrication of support structures and allied installations connected with capital goods and plant machinery.

Analysis: The items were shown to have been used for technological structures, bridges, cable trays and supporting equipment such as reactors, distillation columns and heat exchangers. Structural supports necessary for proper functioning of machinery and for fabrication of capital goods, parts and accessories were held to be eligible for credit.

Conclusion: Credit on MS items used for support structures and fabrication connected with capital goods was admissible, and the assessee succeeded on this issue.

Issue (ii): whether Cenvat credit was admissible on the same items used for construction of a canteen shed.

Analysis: Use of MS items for a canteen shed was treated as outside the scope of eligible capital goods-related use, and the credit attributable to such construction was required to be quantified and reversed.

Conclusion: Credit attributable to MS items used for the canteen shed was disallowed, and the assessee failed on this issue.

Final Conclusion: The impugned order was modified, with credit allowed for eligible industrial use of the MS items and denied only to the extent relatable to the canteen shed.

Ratio Decidendi: MS items used as structural supports for machinery and for fabrication connected with capital goods are eligible for Cenvat credit, but the same benefit does not extend to items used for construction of a canteen shed.

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