Cenvat credit on boiler parts and supporting steel structures remains admissible when used as part of an assembled boiler system.

Cenvat credit on boiler parts supplied in disassembled form was treated as admissible where the goods were manufactured and cleared as components of a complete boiler system and assembled at the recipient's factory. Structural items such as steel angles, channels and similar materials used to fabricate supporting structures were also held eligible when they formed part of the boiler assembly. The classification under Chapter 8402 was accepted for parts of boiler, and the department could not deny credit merely because some items might also fit Chapter 7308. Denial of credit, interest and penalties was therefore not sustainable.

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Issues: Whether Cenvat credit was admissible on boiler parts and components supplied in disassembled form, including steel items used for fabrication of supporting structures, when the goods were classified as parts of boiler under Chapter 8402 and the department sought to treat them as fabricated structures under Chapter 7308.

Analysis: The boiler was manufactured and cleared in disassembled condition and assembled at the recipient's factory as a complete boiler system. The items cleared under Chapter 8402 included the components necessary for the boiler, including structural items used as part of the boiler assembly. The Court relied on the settled position that structural components essentially used as part of the boiler system are classifiable as parts of boiler and fall within the eligible credit regime. It also noted that even angles, channels and similar steel items used in fabrication of supporting structures which ultimately become part of the boiler are eligible for Cenvat credit and are not to be denied merely because they are capable of separate chapter 73 classification.

Conclusion: Cenvat credit was admissible and the denial of credit, interest and penalties could not be sustained.

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