Cenvat credit on materials used for erection and support of plant machinery is admissible when not part of civil construction.

Cenvat credit was admissible on welding electrodes, SS coil, MS angles, MS channels and joists used in the factory for erection, installation, expansion, modification, repair and support of plant and machinery. The decisive factor was that the items were used for fabrication and maintenance of machinery and for supporting structures integral to the manufacturing set-up, so the civil construction exclusion did not apply. On that basis, the disallowance and penalty were unsustainable.

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Issues: Whether Cenvat credit was admissible on welding electrodes, SS coil, MS angles, MS channels and joists used in the factory for installation, erection, expansion, modification, repair and support of plant and machinery.

Analysis: The items were found to have been used in the manufacturing premises for erection of new machinery, repair and maintenance of existing machinery, and for supporting structures and staging of equipment such as juice sulphiter, sugar beater, hopper and related installations. The exclusion for civil construction was not attracted on the facts. Following the settled position that materials used for fabrication, erection and support of machinery, and for structures indispensable to the functioning of plant, are eligible for credit, the disputed items were held to qualify for Cenvat credit.

Conclusion: Cenvat credit on the disputed items was admissible and the disallowance and penalty were unsustainable.

Ratio Decidendi: Materials used for erection, fabrication, repair or support of plant and machinery in the factory, where not used as civil construction, qualify for Cenvat credit when they are integrally connected with manufacture.

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