Cenvat credit on structural steel is available for supporting structures, but not for steel used only in foundations.

Structural steel used to fabricate supporting structures for self-manufactured capital goods may qualify for Cenvat credit under the user test and Rule 2(a) of the Cenvat Credit Rules, 2004, because such items can form part of capital goods when used for that purpose. By contrast, steel items used only for laying foundations do not qualify for credit. The note also records that where the dispute turns on interpretation of the credit provisions, penalty is not sustained. The stated effect is a modification of the disallowance to foundation-related items, with re-quantification of the demand and deletion of penalty.

---

---

Issues: Whether Cenvat credit was admissible on iron and steel items used for fabrication of supporting structures for self-manufactured capital goods and for laying foundations.

Analysis: The Tribunal applied the user test and followed the principle that structural steel used in the fabrication of support structures for capital goods can qualify as part of capital goods and therefore attract Cenvat credit under Rule 2(a) of the Cenvat Credit Rules, 2004. It distinguished such use from steel items used merely for laying foundations, for which credit was not available. Since the dispute involved interpretation of the relevant credit provisions, the penalty was not sustained.

Conclusion: Cenvat credit was allowed on steel items used for supporting structures for self-manufactured capital goods, but denied on steel items used for laying foundations; the penalty was set aside.

Final Conclusion: The impugned order was modified to restrict disallowance to foundation-related steel items, with consequential re-quantification of the demand and deletion of penalty.

Ratio Decidendi: Structural steel used to fabricate supporting structures for capital goods may qualify for Cenvat credit as part of capital goods when the user test is satisfied, but steel used only for laying foundations does not.

---