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Issues: Whether Cenvat credit was admissible on structural steel items used in fabrication of support structures for machinery and on oxygen gas used within the factory for repair and maintenance of machinery.
Analysis: The disputed steel items were used to fabricate support structures for capital goods installed in the factory. Applying the settled user test, such items, when used as components or parts of machinery-supporting structures, fall within the ambit of capital goods for Cenvat credit purposes. As regards oxygen gas, the broad definition of input under Rule 2(k) of the Cenvat Credit Rules, 2004 covers goods used in or in relation to manufacture, and credit had already been allowed in similar cases where oxygen gas was used within the factory. The reasoning followed the consistent line of authority recognising credit on such items when used for the manufacturing apparatus or its maintenance.
Conclusion: Cenvat credit on both the structural steel items and oxygen gas was admissible, and the denial of credit was unsustainable.
Ratio Decidendi: Goods used to fabricate support structures for machinery, and consumables used within the factory in relation to manufacture or maintenance, are eligible for Cenvat credit when they satisfy the statutory definition of inputs or capital goods and the user test.
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