Cenvat credit on steel items used to fabricate capital goods is admissible when use is shown and disclosure is recorded.

Steel plates, angles, channels, beams and similar iron and steel items used within the factory for fabrication of capital goods and their accessories may qualify for Cenvat credit on the settled user test, particularly where supporting evidence such as a Chartered Engineer's certificate is available. The demand was also treated as time-barred because the credit was recorded in statutory returns, the relevant legal position was unsettled during the period, and no mala fide suppression was shown; in such circumstances, the extended period was not available. The impugned order was set aside and consequential relief followed.

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Issues: (i) Whether steel plates, angles, channels, beams and similar iron and steel items used in fabrication of capital goods within the factory were eligible for Cenvat credit; (ii) whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether steel plates, angles, channels, beams and similar iron and steel items used in fabrication of capital goods within the factory were eligible for Cenvat credit.

Analysis: The appellant maintained that the disputed items were used in the manufacture of capital goods, and a Chartered Engineer's certificate supported that position. The denial by the lower authorities rested only on the alleged absence of evidence of use in fabrication. Applying the settled user test, steel items used in the fabrication of capital goods and their accessories within the manufacturer's premises are eligible for credit.

Conclusion: The credit on the disputed iron and steel items was admissible and the issue was decided in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The credit was availed by reflecting it in the statutory records and returns. The legal position on the admissibility of such credit was not clear during the relevant period, and the dispute had been the subject of differing decisions. In such circumstances, where the availment was duly recorded and no mala fide suppression was established, the extended period was not available.

Conclusion: The demand was held to be barred by limitation and invocation of the extended period was rejected.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief, as the assessee was entitled to credit and the demand was time-barred.

Ratio Decidendi: Goods used in fabrication of capital goods within the factory may qualify for Cenvat credit on the user test, and the extended limitation period cannot be invoked where availment is disclosed in statutory records and the governing legal position during the relevant period was unsettled.

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