Cenvat credit on structural supports for plant and machinery was held admissible, with the 2009 amendment applying prospectively only.

Structurals, cement, iron and steel used for foundations and for supporting plant and machinery were treated as eligible Cenvat-credit items because they formed an integral part of the machinery used in manufacture. The court held that such goods could qualify as components, spares or accessories of capital goods even if they fell under a different tariff chapter, and they were also covered as inputs under the broad wording of Rule 2(k) for the relevant pre-amendment period. Notification No. 16/2009-Central Excise (N.T.) was held to operate prospectively from 07.07.2009, with no retrospective effect. Cenvat credit was therefore admissible on the structural items.

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Issues: (i) Whether structurals, cement, iron and steel used for foundations and for supporting plant and machinery qualified as components, spares or accessories of capital goods under Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004; (ii) Whether the same goods were eligible as inputs under Rule 2(k) read with Explanation 2 of the Cenvat Credit Rules, 2004, and whether Notification No.16/2009-Central Excise (N.T.) dated 07.07.2009 operated retrospectively.

Issue (i): Whether structurals, cement, iron and steel used for foundations and for supporting plant and machinery qualified as components, spares or accessories of capital goods under Rule 2(a)(A)(iii) of the Cenvat Credit Rules, 2004.

Analysis: The definition of capital goods was read with the clarificatory approach adopted in earlier decisions on Modvat/Cenvat eligibility. Components, spares and accessories of capital goods were treated as eligible without requiring them to fall in the same tariff chapter as the principal capital goods. The structural items used to hold plant and machinery in position were found to be an integral part of the machinery used in manufacture, and therefore could not be excluded merely because they were classifiable under a different chapter.

Conclusion: Yes. The goods qualified as components, spares or accessories of capital goods and the credit claim was in favour of the assessee.

Issue (ii): Whether the same goods were eligible as inputs under Rule 2(k) read with Explanation 2 of the Cenvat Credit Rules, 2004, and whether Notification No.16/2009-Central Excise (N.T.) dated 07.07.2009 operated retrospectively.

Analysis: Rule 2(k) was construed broadly to cover goods used in or in relation to manufacture, including goods used in the manufacture of capital goods employed within the factory. On that reading, structurals, cement, iron and steel used for foundations and supports were inputs for Cenvat purposes for the pre-amendment period. The 2009 amendment expressly came into force only from its publication date and contained no indication of retrospective or merely clarificatory operation; it therefore could not be used to deny credit for periods prior to 07.07.2009.

Conclusion: Yes. The items were inputs for the relevant period, and the 2009 notification operated prospectively only.

Final Conclusion: The questions of law were answered against the Revenue and in favour of the assessees, with Cenvat credit held admissible on the structural items and the later amendment held to have no retrospective effect.

Ratio Decidendi: Goods used as integral supports for plant and machinery employed in manufacture may qualify as capital goods components or as inputs under the Cenvat Credit Rules, and an amendment that expressly takes effect from its publication date operates prospectively unless the text clearly shows retrospective intent.

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