Cenvat Credit on Structural Steel for Support Structures Allowed as Capital Goods Components

Cenvat credit was admissible on structural steel items used to fabricate support structures for capital goods and related machinery in the manufacturing plant. Applying the user test and following Singhal Enterprises, the Tribunal treated such items as components, spares or accessories of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. It further held that the later amendment to Explanation-II to Rule 2(a) could not be applied retrospectively to the relevant period. The denial of credit was therefore set aside in favour of the assessee.

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Issues: Whether Cenvat credit was admissible on structural steel items used in the fabrication of support structures for capital goods and related equipment.

Analysis: The appeal concerned denial of credit on structural materials used in erecting and supporting capital goods in the manufacturing plant. The Tribunal treated the dispute as covered by the earlier decision in Singhal Enterprises, where structural items used for fabrication of support structures were held to be parts of capital goods. Applying the user test, the Tribunal held that such structural items, when used to create necessary support structures for machinery, fall within the ambit of capital goods as components, spares or accessories under Rule 2(a) of the Cenvat Credit Rules, 2004. The Tribunal also noted that the later amendment to Explanation-II to Rule 2(a) was not to be treated as retrospective for the relevant period.

Conclusion: Cenvat credit on the structural items was held admissible and the denial of credit was set aside in favour of the assessee.

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