Cenvat credit on steel used for capital goods fabrication is admissible when the items form integral factory support structures.

Cenvat credit was treated as admissible on steel items used to fabricate capital goods and technological support structures within the factory. Applying the user test, the text states that steel items used in making eligible capital goods, or their integral accessories, parts, or support structures necessary for installation and operation, qualify as inputs under the Cenvat Credit Rules. The analysis relies on binding precedent that such goods are eligible when deployed in the manufacture of capital goods used in the factory. On that basis, the disallowance of credit was unsustainable and the appellant was entitled to the claimed credit.

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Issues: Admissibility of Cenvat credit on steel items used for fabrication of capital goods and technological support structures within the factory.

Analysis: The credit was claimed on steel items used in fabrication of machinery and support structures required for installation and operation of the capital goods. The decision applied the user test and followed the principle that steel items used in fabrication of eligible capital goods or their integral accessories, parts, or support structures used in the factory qualify for credit under the Cenvat Credit Rules. Reliance was placed on binding precedent holding that such goods are to be treated as eligible inputs where they are used in the manufacture of capital goods deployed within the factory.

Conclusion: The appellant was entitled to Cenvat credit on the disputed steel items, and the disallowance was unsustainable.

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