Cenvat credit on structural items allowed where used to fabricate machinery parts and support structures for capital goods.

Cenvat credit on structural items such as angles, channels, CTB bars, cement and welding electrodes was examined by applying the user test to their actual use. Where these goods were used to fabricate machine parts and accessories, including bag filters, bag filter roofs and chimneys, and formed part of the machinery or its support structures, they were treated as components, spares or accessories of capital goods. On that basis, credit was admissible and the Revenue's challenge failed.

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Issues: Whether Cenvat credit was admissible on structural items such as angles, channels, CTB bars, cement and welding electrodes used for fabrication of machine parts and support structures for plant and machinery.

Analysis: The credit dispute turned on the actual use of the goods. The items were found to have been used for fabrication of machinery parts and accessories, including bag filter, bag filter roof and chimney, rather than for a mere civil construction or independent support structure. Applying the user test, structural items used in the fabrication of support structures for capital goods were treated as part of the relevant machines and as components, spares or accessories of capital goods under the Cenvat credit scheme.

Conclusion: The credit was admissible and the Revenue's challenge failed.

Ratio Decidendi: Structural steel and similar items used in the fabrication of support structures for capital goods qualify for Cenvat credit when their use satisfies the user test and they form part of the machinery or its components, spares or accessories.

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