Cenvat credit on structural steel used in sugar plant machinery fabrication is admissible, while factory shed materials remain outside dispute.

Cenvat credit was admissible on M.S. angles, plates, channels, rods, beams, HR coils and aluminium coils when used in fabrication of sugar manufacturing equipment and functional supporting structures, because such items formed part of the machinery or its integral support rather than mere construction material. The items identified included equipment and structures for the juice clarifier, bagasse handling system, tanks, elevators, hoppers, cane carrier, boiler, bagasse carrier and power house panel board structure, and the view was supported by earlier precedent in the assessee's own case and other cited decisions. Credit relating to items used for construction of the factory shed was not in dispute and remained outside the contested claim.

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Issues: Whether Cenvat credit was admissible on structural items such as M.S. angles, plates, channels, rods, beams, HR coils and aluminium coils used in fabrication of sugar manufacturing equipment and supporting structures, and whether credit could be denied for the items used in construction of the factory shed.

Analysis: The items in dispute were shown to have been used in the fabrication of equipment and structures integral to the sugar plant, including juice clarifier, bagasse handling system, tanks, elevators, hoppers, cane carrier, boiler, bagasse carrier and power house panel board structure. The earlier decision in the appellant's own case, together with several cited precedents, had accepted that structural items used for supporting machinery and equipment are eligible for credit when they form part of the machinery or its functional support and are not merely construction material. The record also showed that a distinct portion of the credit related to items used for the factory shed, which the appellant did not contest.

Conclusion: Cenvat credit was admissible on the structural items used in the fabrication of sugar manufacturing equipment and supporting structures. The portion relating to items used for construction of the factory shed remained outside the dispute and was recoverable if not already reversed.

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