Cenvat credit on structural items used for support structures is admissible when they form part of capital goods

Structural items used to fabricate support structures for pipelines and allied installations were treated as eligible capital goods for Cenvat credit where they satisfied the user test and were integrally connected with the functioning of the machinery. The fabricated supports were regarded as parts or accessories of the relevant capital goods, bringing them within Rule 2(a) of the Cenvat Credit Rules, 2004. Credit on the structural items was therefore admissible and the Revenue's challenge failed.

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Issues: Whether Cenvat credit on structural items used for fabrication of support structures for pipelines and allied installations was admissible as capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004.

Analysis: The issue was treated as settled by prior tribunal and High Court decisions. Applying the user test, structural steel and similar items used to fabricate support structures for capital goods were held to be integrally connected with the functioning of the machinery. Such fabricated structures were treated as parts or accessories of the relevant capital goods and therefore fell within the scope of capital goods for Cenvat credit purposes.

Conclusion: The credit on the structural items was admissible and the Revenue's challenge failed.

Ratio Decidendi: Structural items used in fabrication of support structures for capital goods are eligible for Cenvat credit when they satisfy the user test and form part of the capital goods or their components, spares or accessories.

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