Cenvat credit on structural steel used to fabricate support structures for capital goods was allowed under the user test.

Cenvat credit was held admissible on iron and steel items used inside the factory to fabricate support structures and related parts for installed machinery and plant equipment. The user test was applied to determine whether the goods functioned as parts, components or accessories of capital goods, and the accepted factual use for fabrication supported eligibility. Denial of credit merely because the items were structural steel was not sustained on the facts. The settled principle that steel used to fabricate support structures for capital goods can qualify for credit was followed, and the Revenue's appeal failed.

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Issues: Whether Cenvat credit was admissible on iron and steel items used for fabrication of support structures and related parts of machinery/capital goods inside the factory.

Analysis: The disputed goods were used in the fabrication of support structures for installed machinery and plant equipment engaged in manufacture. The entitlement to credit depended on whether such items could be treated as parts, components or accessories of capital goods by applying the user test. The factual finding of actual use for fabrication inside the factory was accepted, and the denial based solely on their use as structural items was not supported by material facts. The settled principle that structural steel used for fabrication of capital goods and their accessories may qualify for credit was applied.

Conclusion: Cenvat credit was admissible on the iron and steel items used in the fabrication of support structures for capital goods, and the Revenue's appeal failed.

Ratio Decidendi: Structural steel items used in the fabrication of support structures for capital goods, when established by the user test, fall within the ambit of capital goods as components or accessories and are eligible for Cenvat credit.

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