Cenvat credit on structural steel for machine support structures upheld where the items were integral to capital goods.

Structural steel items used to fabricate support structures for capital goods were treated as eligible for Cenvat credit because the fabricated supports were integral to mounting and functioning the machinery. Applying the user test, the items were regarded as part of the capital goods as components, spares or accessories, consistent with prior Tribunal and Supreme Court guidance on similar steel items used in machine support structures. The disallowance was therefore unsustainable, and the credit demand, interest and penalties were set aside.

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

Analysis: The structural steel items were used to fabricate support structures necessary for mounting and functioning of capital goods. Applying the user test, such fabricated structures were treated as part of the machinery and brought within the ambit of capital goods as components, spares or accessories. The prior Tribunal view followed the Supreme Court's approach on similar steel items used in fabrication of machine support structures.

Conclusion: Cenvat credit was admissible on the steel items used for fabrication of support structures, and the disallowance was unsustainable.

Final Conclusion: The appeal succeeded and the credit demand, interest and penalties were set aside.

Ratio Decidendi: Structural steel items used in fabricating support structures that are integral to the functioning of capital goods qualify for Cenvat credit when they satisfy the user test and fall within the scope of capital goods as components, spares or accessories.

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