Cenvat credit on steel items used for machinery fabrication was upheld, with denial of credit found unsustainable.

Cenvat credit on duty-paid TMT bars, TOR steel, MS plates, MS angles, SS sheets, HR sheets and other iron and steel items was treated as admissible where the goods were received in the factory and used for fabrication of machinery and its supporting structures. The analysis followed the Madras High Court ruling in Thiru Arooran Sugars, which considered competing views, distinguished Saraswati Sugar Mills, and adopted the Gujarat High Court approach on similar steel items used in factory structures. On that basis, the denial of credit could not stand and the demand was held unsustainable.

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Issues: Whether Cenvat credit was admissible on duty-paid TMT bars, TOR steel, MS plates, MS angles, SS sheets, HR sheets, supporting structures and other iron and steel items used for fabrication of machinery and structural support.

Analysis: The items were duty paid, received in the factory and used in fabrication of machinery and its supporting structures. The issue was treated as covered by the authoritative judgment of the High Court of Madras in Thiru Arooran Sugars, which had considered the competing views, distinguished Saraswati Sugar Mills, and followed the Gujarat High Court view on similar steel items used in factory structures. In that legal setting, the impugned denial of credit could not survive.

Conclusion: Cenvat credit was held admissible and the demand was unsustainable.

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