Cenvat credit on structural items for machine support structures held admissible where they form part of capital goods.

Cenvat credit was held admissible on structural items, windows, doors and similar goods used to fabricate support structures for capital goods in the factory. Applying the user test, the Tribunal treated such fabrications as integrally connected with the effective functioning of machinery like kilns, conveyor systems and furnaces, and therefore within the ambit of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. The earlier view allowing credit on structurals used for support structures was followed, and the disallowance was held unsustainable.

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Issues: Whether Cenvat credit was admissible on structural items, windows, doors and similar goods used for fabrication of support structures for capital goods in the factory.

Analysis: The Tribunal applied the user test to hold that structural items used to fabricate support structures for capital goods are integrally connected with the functioning of the machines. Goods such as kiln, conveyor systems and furnaces cannot operate in isolation and require suitable support structures. The fabricated items were therefore treated as parts of the relevant machines and as falling within the ambit of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004. The Tribunal followed the earlier view that the credit is allowable on such structurals used for fabrication of support structures.

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

Final Conclusion: The impugned order was set aside and the assessee succeeded in the appeal.

Ratio Decidendi: Structural items used to fabricate support structures for capital goods are eligible for Cenvat credit when, applying the user test, they form part of the effective functioning of the machinery and fall within the statutory concept of capital goods.

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