Cenvat credit on support structures for capital goods held admissible where fabricated steel items were integral to machinery functioning.

Cenvat credit was admissible on iron and steel items used to fabricate and install support structures for capital goods, because the Tribunal treated the structures as integral to the functioning of the machinery and within the scope of components, spares or accessories. It held that the amended Explanation II to Rule 2(a) of the Cenvat Credit Rules, 2004 operated prospectively and followed earlier precedent covering machinery-supporting structures, so the Revenue's challenge failed.

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Issues: Whether Cenvat credit was admissible on iron and steel items used in fabrication and installation of support structures for capital goods.

Analysis: The Tribunal applied the user test to the structural steel items used for supporting machinery and held that such fabricated structures were integral to the functioning of the capital goods. It relied on the view that the amendment to Explanation-II to Rule 2(a) of the Cenvat Credit Rules, 2004 was prospective, and followed the principle that items used in fabrication of machinery-supporting structures could fall within the ambit of capital goods as components, spares or accessories. The Tribunal found the issue covered by earlier precedent and saw no reason to depart from that view.

Conclusion: Cenvat credit was admissible on the goods used for fabrication of support structures, and the Revenue's challenge failed.

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