Cenvat credit on structural steel for machine support structures was allowed as they formed part of capital goods.

Structural steel items used to fabricate support structures for machinery and equipment in cement manufacture were treated as eligible for Cenvat credit because they were integrally employed in the functioning and support of capital goods. Applying the user test, such items were not regarded as mere building material; instead, they formed part of the support arrangement for the machines and therefore fell within capital goods, including their components, spares and accessories. On that basis, Cenvat credit was admissible on the structural items used for fabrication of the support structures.

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

Analysis: The structural steel items were used to fabricate support structures for machinery and equipment used in cement manufacture. Applying the user test, goods used in such a manner and forming part of the support arrangement for capital goods fall within the ambit of capital goods, including their components, spares and accessories. The reasoning was supported by the principle that the items were not used as mere building material but were integrally employed for the functioning and support of the machines.

Conclusion: The structural items used in fabrication of support structures qualified as capital goods under the Cenvat Credit Rules, and Cenvat credit was admissible in favour of the assessee.

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