Cenvat credit on structural steel used for machinery support structures allowed where items function as parts of capital goods.

Cenvat credit was admissible on HR coils, CR/SS sheets, MS channels, angles and similar structural steel items used to fabricate support structures for capital goods installed in the factory. Applying the user test, the Tribunal treated the fabricated structures as integral to the functioning of machines such as a kiln, conveyor system and furnace, rather than as mere civil construction. Because the items formed parts or components of the machinery, the disputed credit was allowed and the Revenue's challenge failed.

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Issues: Whether Cenvat credit was admissible on HR coils, CR/SS sheets, MS channels, angles and similar structural steel items used in fabricating support structures for capital goods installed in the factory.

Analysis: The dispute turned on whether the structural items, after being used in fabrication of support structures for machines such as kiln, conveyor system and furnace, could be treated as part of the capital goods or as eligible inputs under the Cenvat scheme. Applying the user test and the settled principle that items used to fabricate support structures integral to the functioning of capital goods may be treated as components or parts of such capital goods, the Tribunal held that the fabricated structures were not mere civil constructions but aided the working of the machinery. On that basis, the credit was held to be admissible.

Conclusion: The Revenue's challenge failed and the assessee was held entitled to Cenvat credit on the disputed structural items.

Ratio Decidendi: Structural steel items used in fabricating support structures for capital goods qualify for Cenvat credit when, on applying the user test, they constitute parts or components of the machinery rather than mere civil structures.

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