Cenvat credit on structural steel for machinery supports allowed where the items function as integral capital goods components.

Structural steel items used to fabricate support structures for machinery and capital goods within the factory were held eligible for Cenvat credit because, applying the user test, the supports functioned as an integral part of the capital goods rather than as mere civil structures. The post-7-7-2009 amendment was not treated as clarificatory so as to deny credit for the earlier period. Credit on the disputed items was therefore admissible, and the related demand and adverse findings could not be sustained.

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Issues: Whether Cenvat credit was admissible on structural steel items used in fabrication of support structures for capital goods within the factory.

Analysis: The items were used for fabrication of support structures for machinery and capital goods, not as mere civil structures. Applying the user test, such fabricated supports were integral to the functioning of the capital goods and therefore fell within the ambit of capital goods as components, spares or accessories under the relevant credit rule. The reasoning also followed the view that the post-7-7-2009 amendment could not be treated as clarificatory so as to deny credit for the prior period.

Conclusion: Cenvat credit on the disputed structural items was admissible and the issue was answered in favour of the assessee.

Final Conclusion: The credit demand and all consequential adverse findings could not be sustained, and the appeal succeeded.

Ratio Decidendi: Structural steel items used to fabricate support structures for capital goods are eligible for Cenvat credit when, applying the user test, they function as part of the machinery and fall within the concept of components, spares or accessories of capital goods.

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