CENVAT credit on steel items used to fabricate plant support structures was upheld under the user test.

CENVAT credit on iron and steel items used in fabrication of support structures and other capital goods for a sponge iron plant was admissible where the goods were integrally employed in making identifiable plant and machinery components within the factory. The dispute was resolved by applying the user test to determine whether the items, though classified under Chapter 72, functioned as capital goods, components, spares or accessories rather than as general structural material. Accepted factual findings showed actual use in fabrication, and the Revenue failed to dislodge them with evidence. The settled line of authority on use in fabrication of capital goods supported credit, so the Revenue challenge failed.

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Issues: Whether CENVAT credit was admissible on iron and steel items used in the fabrication of support structures and other capital goods for a sponge iron plant.

Analysis: The dispute turned on whether the disputed iron and steel items, though classified under Chapter 72, were used merely as general structural material or were actually employed in the fabrication of identifiable capital goods and their components within the factory. The credit claim had to be tested on the user test applied to determine whether the goods formed part of capital goods, components, spares or accessories within the meaning of the CENVAT Credit Rules, 2002. The factual findings accepted by the original authority showed use of the items in fabrication of plant and machinery, and the Revenue did not dislodge those findings with material evidence. The settled line of authority, including the user test and the treatment of items used in fabrication of support structures, supported admissibility where the items were integrally used for capital goods.

Conclusion: CENVAT credit on the iron and steel items was admissible, and the Revenue's challenge failed.

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