CENVAT credit on structural steel for machinery support allowed in principle, but cement for roads rejected and matter remanded.

CENVAT credit was treated as admissible in principle on duty-paid structural steel items such as angles, channels and beams when used to fabricate support structures for capital goods, because such structures were regarded as part of the machinery and satisfied the user test. Credit on cement used for roads and other non-capital purposes was held not admissible. As the record did not clearly separate materials used for machinery-related fabrication from those used for other structures, factual verification was required before final allowance, and the matter was remanded for scrutiny, granting only partial relief.

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Issues: Whether CENVAT credit was admissible on duty paid steel items used in fabrication of support structures and machinery, and whether cement used for roads and other non-machine purposes was eligible for credit.

Analysis: The structural steel items such as angles, channels, beams and similar goods, when used in fabrication of support structures for capital goods, were treated as admissible in principle because such fabricated structures formed part of the machinery and satisfied the user test applied to capital goods. Cement used for building roads and other non-capital purposes was not eligible for credit. Since the record did not clearly establish the exact quantity of materials used for machinery as distinct from other structures, factual verification was required before final allowance.

Conclusion: Credit on structural items used for fabrication of machinery-supporting structures was held to be admissible in principle, while credit on cement used for roads and similar purposes was not admissible; the matter was remanded for factual scrutiny, resulting in only partial relief to the assessee.

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