Cenvat credit on steel used for support structures allowed where actual use was proved and amendment applied prospectively.

Cenvat credit on iron and steel items used to fabricate support structures for capital goods was treated as admissible. The amendment to Rule 2(k) of the Cenvat Credit Rules, 2004 was considered prospective, so it did not justify retrospective denial of credit. Actual use of the materials, supported by the Chartered Engineer's certificate, was accepted, and a tentative bill of material was not regarded as a valid ground to refuse credit. Because the credit was allowed, the associated penalty under section 11AC of the Central Excise Act, 1944 was also not sustainable.

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Issues: Whether Cenvat credit on iron and steel items used for fabrication of support structures for capital goods was admissible.

Analysis: The denial of credit on steel items used in supporting structures was based on the view that the amendment to Rule 2(k) of the Cenvat Credit Rules, 2004 operated retrospectively. The amendment was held to be prospective, and credit on iron and steel items used for fabrication of support structures for capital goods was held allowable. The actual use of the materials, supported by the Chartered Engineer's certificate, was accepted, and the tentative bill of material was not treated as a valid basis to deny credit. Since the credit itself was held admissible, penalty under section 11AC of the Central Excise Act, 1944 was also not sustainable.

Conclusion: Cenvat credit on the disputed iron and steel items was held admissible, and the denial of credit and consequential penalty were set aside in favour of the assessee.

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