Cenvat credit on fabrication steel items for factory support structures remains admissible under the user test.

Cenvat credit on iron and steel items used within the factory for fabricating plant, machinery and supporting structures for sponge iron manufacture was held admissible. Applying the user test, the Tribunal treated such items as forming part of capital goods or their components, spares or accessories where they were used for fabrication of equipment necessary for functioning of the factory. Credit was not denied merely because the resulting support structures were embedded to earth, and the Revenue's objection on that basis failed.

---

---

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

Analysis: The dispute concerned iron and steel items used for fabricating identifiable plant and machinery and their supporting structures. The decisive test was whether the goods, on application of the user test, formed part of capital goods or their components, spares or accessories. The appeal was sought to be supported by the view that support structures embedded to earth were not eligible, but the Tribunal followed the consistent line of authority holding that where such items are used inside the factory for fabrication of capital goods and allied structures necessary for their functioning, credit cannot be denied merely because the structures are fixed to the earth.

Conclusion: Cenvat credit on the disputed iron and steel items was held admissible and the Revenue's appeal failed.

---