CENVAT credit on structural steel used in fabricating support structures for capital goods is admissible when actual use satisfies the user test.

CENVAT credit was held admissible on iron and steel items such as angles, channels, joints, beams and plates used in fabricating support structures and parts or components of capital goods within the factory. The deciding factor was the actual use of the goods: where the user test shows that structural steel is integrally connected with the functioning of machinery and operates as components, spares or accessories of capital goods, credit is available. The factual findings that the items were used for fabrication of capital goods and support structures were accepted, so the Revenue's challenge failed.

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Issues: Whether CENVAT credit was admissible on iron and steel items such as angles, channels, joints, beams and plates used in fabrication of support structures and parts or components of capital goods within the factory.

Analysis: The dispute turned on whether the goods were merely structural materials or whether, on their actual use in the factory, they formed part of capital goods or their components, spares and accessories. Applying the user test and the settled principle that goods used in fabrication of support structures for capital goods can qualify as capital goods where they are integrally connected with the functioning of the machinery, the factual findings recorded by the original authority were accepted. The reasoning was consistent with the line of authority recognising credit on structural steel items used for fabrication and erection of capital goods and support structures.

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

Ratio Decidendi: Structural steel items used in the fabrication of support structures and integrated parts of capital goods are eligible for CENVAT credit when the user test shows that they function as components, spares or accessories of the capital goods.

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