Cenvat credit on steel structurals used in machinery support structures allowed under the user test and capital goods principle.

Steel structurals used to fabricate support structures for machinery were treated as eligible for Cenvat credit where they were integral to the erection and functioning of the machinery. The Tribunal applied the user test and the principle that capital goods include components, spares and accessories used to support machinery necessary for its operation. On that basis, the denial of credit was held unsustainable, the assessee's appeal succeeded, and the Revenue's cross-appeal was rejected.

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Issues: Whether steel structurals used in fabrication of support structures for machinery are eligible for Cenvat credit as capital goods or parts thereof.

Analysis: The Tribunal applied the settled user test and the principle that goods used in erection or fabrication of support structures integral to operating machinery can qualify as capital goods, including components, spares and accessories. Relying on the binding precedent that such structural items, when used to support machinery necessary for its erection and functioning, fall within the scope of capital goods under the Cenvat credit regime, it held the credit denial to be unsustainable.

Conclusion: The steel structurals were held eligible for Cenvat credit and the assessee's appeal succeeded. The Revenue's cross appeal was rejected.

Ratio Decidendi: Goods used in fabrication of support structures integral to the erection and functioning of machinery are eligible for Cenvat credit as capital goods or their components, spares and accessories when they satisfy the user test.

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