Cenvat credit on structural steel used for essential machinery supports held admissible where integral to capital goods

Structural steel items used to fabricate support structures for plant and machinery were held eligible for Cenvat credit when those supports were integral to the functioning of capital goods and were used in manufacture. Applying the user test, the items were not treated as mere immovable plant material because the Revenue did not dispute their use as components and accessories of machinery. Credit could not be denied simply because the structures were embedded in the plant setup. The assessee's claim was upheld and the denial of Cenvat credit was set aside.

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Issues: Whether structural steel items used in the fabrication of support structures for plant and machinery are eligible for Cenvat credit as components, spares or accessories of capital goods.

Analysis: The structural items were used for expansion and for fabrication of supports on which machinery and equipment were installed for manufacture of the final product. Applying the user test, structural steel used to fabricate support structures that are integral to the functioning of capital goods is not to be treated as mere immovable plant material. Where the Revenue does not dispute that the items were used as components and accessories of machinery employed in manufacture, the credit cannot be denied merely because the structures themselves are embedded or part of the plant setup. The settled principle is that items forming an integral part of capital goods, or used in their fabrication as supports essential for their functioning, fall within the scope of capital goods for Cenvat purposes.

Conclusion: The credit was admissible and the denial of Cenvat credit was unsustainable; the appeal succeeded in favour of the assessee.

Final Conclusion: The impugned order was set aside and the assessee's claim to Cenvat credit on the disputed structural items was upheld.

Ratio Decidendi: Structural steel items used in the fabrication of support structures that are integral to capital goods, when applied as essential supports for machinery used in manufacture, qualify for Cenvat credit.

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