CENVAT credit on structural items for support structures of capital goods was held admissible under the user test.

CENVAT credit was considered admissible on M.S. angles, channels, beams, sheets, plates and similar structural items when they were used to fabricate support structures for capital goods such as machinery and equipment. Applying the user test and the settled principle that components, spares and accessories of capital goods fall within the scope of capital goods, the Tribunal treated such fabricated support structures as part of the relevant machinery. On that basis, credit on the structural items used for fabrication of the supporting structures was allowed, and the disallowance was found unsustainable.

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Issues: Whether CENVAT credit was admissible on M.S. angles, channels, beams, sheets, plates and similar structural items used in the fabrication of supporting structures for capital goods.

Analysis: The structural steel items were used to fabricate support structures for capital goods such as machinery and equipment, which could not function without appropriate support. Applying the user test and the settled principle that components, spares and accessories of capital goods fall within the ambit of capital goods, the Tribunal held that such fabricated support structures are part of the relevant machinery. The cited legal position supported allowance of credit on structurals used for fabrication of support structures for capital goods.

Conclusion: CENVAT credit on the structural items used for fabrication of support structures for capital goods was admissible, and the disallowance was unsustainable.

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