CENVAT credit on structural steel used for capital goods support structures upheld under the user test and prospective input amendment.

CENVAT credit was admissible on MS angles, channels, beams, plates and similar structural items used to fabricate capital goods support structures inside the factory, because the user test was satisfied where those items formed part of machinery support integral to the functioning of the capital goods. The reasoning treated structurals worked upon for supporting equipment as part of the relevant machine or its components, spares or accessories, and noted that the 7-7-2009 amendment to the definition of input was prospective. Denial of credit on the ground that the items were used for fabrication of support structures was therefore unsustainable, and the demand was set aside.

---

---

Issues: Whether CENVAT credit was admissible on MS angles, channels, beams, plates and similar structural items used in the fabrication of capital goods and support structures for capital goods in the factory premises.

Analysis: The dispute turned on whether the structural steel items, though not themselves capital goods, were used in the fabrication of support structures integral to the functioning of capital goods. The decision relied on the settled user test and the view that such structurals, when worked upon for supporting machinery and equipment, become part of the relevant machine or its components, spares or accessories. The reasoning also drew support from the line of authority holding that the amendment to the definition of input with effect from 7-7-2009 was prospective and that credit cannot be denied merely because the items were used for fabrication of structures supporting capital goods.

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

Final Conclusion: The demand and related adverse findings were set aside, and the appellant obtained full relief on the credit issue.

Ratio Decidendi: Structural steel items used in the fabrication of support structures integral to capital goods satisfy the user test and are eligible for CENVAT credit when they form part of the capital goods or their components, spares or accessories.

---