CENVAT credit on structural steel used for machinery support structures is admissible where it facilitates capital goods function.

CENVAT credit was considered admissible on M.S. angles, channels, beams and similar structural steel items when they were used to fabricate support structures for capital goods installed in the factory. The Tribunal applied the user test and treated such items as part of the relevant machines or their components and accessories where they were worked upon to support machinery and facilitate its functioning. Credit was not to be denied merely because the items were used in fabrication of structures, so long as the structures were integrally connected with capital goods. The disallowance was therefore held unsustainable.

---

---

Issues: Whether CENVAT credit was admissible on M.S. angles, channels, beams and similar structural steel items used in the fabrication of capital goods and support structures in the factory.

Analysis: The dispute concerned structural steel items used not as independent construction material but for fabrication of support structures on which capital goods were installed and operated. Applying the user test, the Tribunal held that such items, when worked upon for the purpose of supporting machinery and facilitating its functioning, form part of the relevant machines or their components and accessories. The reasoning was aligned with the settled view that credit cannot be denied merely because the items were used in fabrication of structures, where the structures themselves are integrally connected with capital goods.

Conclusion: CENVAT credit on the structural steel items was admissible and the disallowance was unsustainable.

---