Cenvat credit on structural steel for machinery support structures recognised where the user test shows integral use in fabrication.

Structural steel items such as MS angles, channels, joists and beams used to fabricate support structures for kiln machinery were treated as eligible for Cenvat credit because they functioned as components integral to the capital goods rather than as mere building material. Applying the user test, the determinative question was whether the items formed part of the machinery or its supporting system. The settled view recognised structurals used in fabrication of support structures for capital goods as falling within the ambit of capital goods for Cenvat purposes, so the denial of credit was unsustainable.

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Issues: Whether structural steel items such as MS angles, channels, joists and beams used for fabrication of support structures for kiln machinery were eligible for Cenvat credit as capital goods under the Cenvat Credit Rules, 2004.

Analysis: The structural items were used for supporting and fabricating structures for capital goods and were not treated as mere building material. The user test applied in prior decisions governed the determination of whether such items formed part of the machinery or its supporting components. Following the settled view that structurals used in fabrication of support structures for capital goods fall within the ambit of capital goods for Cenvat credit purposes, the demand could not be sustained.

Conclusion: The issue was decided in favour of the assessee and the denial of Cenvat credit was set aside.

Ratio Decidendi: Structural steel items used in fabrication of support structures for capital goods are eligible for Cenvat credit where the user test shows they are integral to the functioning of the machinery.

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