CENVAT credit on structural steel used for support structures of capital goods was held admissible under the user test.

CENVAT credit on MS angles, channels, beams, TMT bars, CTD bars and similar structural items was admissible when they were used to fabricate support structures for capital goods. Applying the user test, the Tribunal treated such items, once integrated into the necessary supports on which machinery was installed and operated, as part of the capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. It also held that the later amendment treating such credit differently operated prospectively and did not affect the period in dispute. The credit, along with related interest and penalties, was therefore not sustainable against the assessee.

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Issues: Whether CENVAT credit was admissible on MS angles, channels, beams, TMT bars, CTD bars and similar structural items used in fabricating support structures for capital goods.

Analysis: The Tribunal applied the user test to the structural items used for fabrication of support structures on which machinery and other capital goods were installed. It relied on the view that such items, when worked into support structures necessary for the functioning of plant and machinery, form part of the relevant machines and fall within the scope of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. The Tribunal also noted that the amendment treating such credit differently was prospective and did not affect the period in dispute.

Conclusion: The credit on the disputed structural items used for fabrication of capital goods and their support structures was admissible, in favour of the assessee.

Final Conclusion: The disallowance of credit, interest and penalties could not be sustained, and the assessee was entitled to the benefit of CENVAT credit on the items used for fabrication of capital goods and their supporting structures.

Ratio Decidendi: Structural steel items used to fabricate necessary support structures for capital goods are eligible for CENVAT credit where, applying the user test, they function as part of the capital goods and the relevant credit provision covers components and accessories of such goods.

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