Cenvat credit on support structure materials and fabrication inputs held admissible where linked to machinery functioning.

Cenvat credit was held admissible on steel items such as plates, angles and channels used to fabricate support structures for plant and machinery within the factory, because the fabricated structures were treated as integral to the functioning of the capital goods and not merely as civil construction. The same principle was applied to oxygen gas and welding electrodes used in that fabrication, as there was no material showing they were confined to repair and maintenance. Applying the user test and the prevailing view on support structures linked to machinery, the credit claim succeeded and the Revenue's appeals failed.

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Issues: Whether Cenvat credit was admissible on steel items such as plates, angles, channels and allied goods used in fabrication of support structures for plant and machinery, and on oxygen gas and welding electrodes used for such fabrication.

Analysis: The structural items were found to have been used within the factory for fabrication of technological structures supporting capital goods and machinery used in manufacture of final products. The reasoning accepted that such fabricated structures formed part of the machinery or were integral to its functioning, and that credit could not be denied merely because the items were used in construction of support structures. The same approach was applied to oxygen gas and welding electrodes used in the course of fabrication of those structures, there being no material to show that they were confined to repair and maintenance. Applying the user test and the prevailing view that support structures linked to machinery fall within the ambit of capital goods, the credit was held admissible.

Conclusion: Cenvat credit on the disputed steel items, oxygen gas and welding electrodes was admissible, and the Revenue's appeals failed.

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