CENVAT credit admissibility on excess duty paid and structural steel used for machinery support upheld under the user test.

CENVAT credit was held admissible on duty and cess paid on goods even where such duty and cess were not ultimately required to be paid, because credit cannot be denied merely on that basis when payment was made on cleared goods. Credit was also held admissible on MS angles, channels, beams and similar structural items used to fabricate support structures and foundation for machinery within the factory, applying the user test and treating the fabricated structures as part of capital goods under the Cenvat Credit Rules, 2004. The denial of credit on both heads was therefore unsustainable, and the assessee was entitled to the claimed credit with consequential relief.

---

---

Issues: (i) whether CENVAT credit was admissible on duty and cess paid though such duty and cess were not required to be paid; (ii) whether CENVAT credit was admissible on MS angles, channels, beams and similar structural items used for fabrication of support structures and foundation for machinery within the factory.

Issue (i): whether CENVAT credit was admissible on duty and cess paid though such duty and cess were not required to be paid.

Analysis: The credit dispute on the excess duty and cess paid was governed by the settled principle that credit cannot be denied merely because the duty was ultimately found not payable when the payment had been made on the cleared goods. The issue stood covered by binding precedent relied upon for the assessee.

Conclusion: Credit on the excess duty and cess paid was admissible, in favour of the assessee.

Issue (ii): whether CENVAT credit was admissible on MS angles, channels, beams and similar structural items used for fabrication of support structures and foundation for machinery within the factory.

Analysis: The structural items were used for fabrication of support structures for capital goods installed in the factory. Applying the user test and the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004, such fabricated support structures were treated as parts of the machinery. The cited precedent on structural steel items supported admissibility of credit.

Conclusion: Credit on MS angles, channels, beams and similar structural items was admissible, in favour of the assessee.

Final Conclusion: The denial of CENVAT credit on both the disputed heads was unsustainable, and the assessee was entitled to the credit claimed with consequential relief according to law.

Ratio Decidendi: CENVAT credit is admissible on duty paid on structural items used to fabricate support structures or foundation for machinery within the factory when such items satisfy the user test and fall within the scope of capital goods under the credit rules.

---