Cenvat credit on structural steel used for machinery support is treated as admissible under the credit rules.

Cenvat credit on iron and steel items used for erection, support structures, and maintenance of plant and machinery is examined under the Cenvat Credit Rules, 2004, including the impact of Explanation 2 to Rule 2(k) inserted by Notification No. 16/2009-C.E. (N.T.). The commentary notes that earlier High Court decisions on similar items had accepted credit where the goods were used for erection and support of machinery. On that basis, structural steel items were treated as credit-eligible on the stated facts, and the demand and penalty were described as unsustainable.

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Issues: Whether Cenvat credit was admissible on iron and steel items used in the factory for erection, support structures, and maintenance of plant and machinery, and whether the demand and penalty were sustainable.

Analysis: The credit dispute turned on the scope of capital goods and inputs under the Cenvat Credit Rules, 2004, including the effect of Explanation 2 to Rule 2(k) inserted by Notification No. 16/2009-C.E. (N.T.) dated 07.07.2009. The Tribunal found that the controversy was squarely covered by the appellant's own earlier decisions of the High Court, which had accepted credit on similar items used for erection and support of machinery. In view of that binding position, the structural steel items could not be denied credit in the facts of the case.

Conclusion: Cenvat credit was held admissible, and the confirmation of demand and penalty was set aside.

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