CENVAT credit on steel used for factory machinery and support structures is admissible under the user test.

CENVAT credit was admissible on steel and allied materials used within the factory to fabricate machinery and support structures for capital goods. Applying the user test under the Cenvat Credit Rules, 2004, such structural items were treated as part of the machinery or as components and accessories of capital goods. The supporting precedent and Chartered Engineer's certificate reinforced that the materials had the requisite nexus with fabrication of eligible capital goods. The disallowance was therefore unsustainable.

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Issues: Whether CENVAT credit was admissible on steel and allied materials used for fabrication of machinery, capital goods and support structures within the factory premises.

Analysis: The materials in question were used for fabrication of machineries and for making support structures for capital goods installed in the factory. The dispute was governed by the definition of input and capital goods under the Cenvat Credit Rules, 2004. Applying the user test, structural items used to fabricate support structures for capital goods were treated as part of the machinery or as components and accessories of capital goods. The cited precedent also held that such use entitled the assessee to credit, and the appellant's claim was supported by a Chartered Engineer's certificate.

Conclusion: CENVAT credit was admissible on the materials used for fabrication of machinery and support structures, and the disallowance was unsustainable.

Ratio Decidendi: Structural steel and similar materials used within the factory to fabricate support structures for capital goods satisfy the user test and fall within the ambit of capital goods or their components and accessories for CENVAT credit purposes.

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