Cenvat credit on structural steel used for machinery support and repairs held admissible despite later exclusion

Cenvat credit on structural steel used in fabrication, repair, and support of plant and machinery was treated as admissible where the goods satisfied the user test under the Cenvat Credit Rules, 2004. The later exclusion of structural steel was applied prospectively and was not treated as clarificatory, so it could not be used to deny credit for the relevant period. The contrary Larger Bench view in Vandana Global was regarded as displaced by later High Court rulings and the Supreme Court ratio in Rajasthan Spinning & Weaving Mills. Credit for steel used in chimney fabrication, furnace repairs, and supporting structures was therefore held allowable.

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Issues: Whether Cenvat credit was admissible on structural steel used in the manufacture and repair of plant and machinery, and whether the credit could be denied by relying on the later exclusion and the Larger Bench view in Vandana Global.

Analysis: The credit claim related to steel items used as components, spares, repairs, and structural support for machinery and related installations. The decisive question was whether such goods qualified under the Cenvat Credit Rules, 2004 as inputs or capital goods on the user test. The later amendment excluding structural steel was treated as prospective and not clarificatory, and the contrary Larger Bench view was held to have been displaced by subsequent High Court decisions and the ratio of the Supreme Court in Rajasthan Spinning & Weaving Mills. On that basis, structural steel used in fabrication of chimney, furnace repairs, and supporting structures for plant and machinery was held to be eligible for credit.

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

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