CENVAT credit on steel items for machinery support structures was upheld under the user test and capital goods definition.

Steel items such as channels, joists, plates, angles and TMT bars used to fabricate the structural support of machinery employed in manufacturing were treated as qualifying for CENVAT credit. Applying the user test and reading Rule 2(a)(A) of the Cenvat Credit Rules, 2004 as pari materia with the earlier capital goods definition, the Tribunal held that materials used to create an integral part of machinery, namely its supporting structure, fall within capital goods for credit purposes. The contrary view in Vandana Global Ltd. was regarded as no longer good law after later Supreme Court authority, and the denial of credit was held unsustainable.

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Issues: Whether Channels, Joists, Plates, Angles, TMT bars and similar steel items used for fabricating structural support for machinery are eligible for CENVAT credit as inputs or capital goods under the Cenvat Credit Rules, 2004.

Analysis: The items were used to fabricate structural support for machinery employed in the manufacture of excisable goods. The Tribunal treated Rule 2(a)(A) of the Cenvat Credit Rules, 2004 as pari materia with the earlier capital goods definition considered by the Supreme Court in the context of the user test. On that reasoning, steel items used for fabricating an integral part of machinery, namely its supporting structure, were held to fall within the ambit of capital goods for the purpose of CENVAT credit. The contrary view in Vandana Global Ltd. was considered no longer good law in light of the later Supreme Court ruling.

Conclusion: The disputed steel items qualified for CENVAT credit. The denial of credit was unsustainable and the appeal succeeded.

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