Cenvat credit for structural steel support structures was allowed where the items functioned as part of capital goods.

Cenvat credit on structural steel used to fabricate support structures for capital goods was treated as admissible where the items supported machinery such as a kiln, conveyor system and furnace. Applying the user test, the fabricated supports were regarded as part of the machinery and therefore within the concept of capital goods, including components, spares and accessories. An earlier contrary view denying credit on similar items was not followed, and credit was allowed under the Cenvat credit framework.

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Issues: Whether Cenvat credit was admissible on steel items used in the fabrication of support structures for capital goods.

Analysis: The structural steel items were used to fabricate support structures on which capital goods such as kiln, conveyor system and furnace were installed. Applying the user test, such fabricated supports were treated as parts of the machinery and therefore within the concept of capital goods, including components, spares and accessories. The earlier view denying credit on similar items was not followed, and the credit was held admissible under the relevant Cenvat credit framework.

Conclusion: Cenvat credit on the structural steel items was held admissible in favour of the assessee.

Ratio Decidendi: Structural steel used in fabricating support structures for capital goods is eligible for Cenvat credit where, on application of the user test, it functions as part of the machinery and falls within capital goods including components, spares and accessories.

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