CENVAT credit on structural steel used for support structures is admissible when it forms part of capital goods.

Structural steel items such as M.S. channels, angles, beams and plates used to fabricate essential support structures for capital goods are eligible for CENVAT credit when, applying the user test, they function as part of the machinery rather than as ordinary construction material. The analysis treats support structures for equipment such as kilns, conveyors and furnaces as integral to the relevant capital goods where they are necessary for installation and operation. On that basis, such fabricated items fall within the ambit of capital goods for credit purposes under the Cenvat Credit Rules, 2004, and denial of credit on that basis is not sustainable.

---

---

Issues: Whether CENVAT credit is admissible on structural steel items used for fabrication of supporting structures for capital goods.

Analysis: The dispute concerned M.S. Channels, M.S. Angles, M.S. Beams, M.S. Plates and similar items used to fabricate support structures on which capital goods were installed. The governing approach was the user test for determining whether the goods used in fabrication could be treated as part of the capital goods. The reasoning followed the principle that structural items, when fabricated into necessary support structures for machinery such as kilns, conveyors and furnaces, are not mere civil construction materials but become components or parts of the relevant machines. On that basis, the structural items used in such fabrication fall within the ambit of capital goods for CENVAT credit purposes under the Cenvat Credit Rules, 2004.

Conclusion: CENVAT credit on the structural items used for making support structures of capital goods was held to be admissible, in favour of the assessee.

Final Conclusion: The denial of credit could not be sustained, and the assessee was entitled to the credit claimed on the disputed structural items.

Ratio Decidendi: Structural steel items used to fabricate essential support structures for capital goods are eligible for CENVAT credit when, applying the user test, they form part of the machinery or its components rather than being treated as ordinary construction material.

---