Cenvat credit on structural steel used for machinery supports allowed under the User Test and capital goods principles.

Structural steel items used to fabricate support structures for machinery were held eligible for Cenvat credit because they satisfied the User Test and were treated as capital goods or their components, spares and accessories under the Cenvat Credit Rules, 2004. The Tribunal noted that the earlier view denying credit on such structural items had been displaced by later authority, and reliance on the overruled precedent was improper. On that basis, the denial of credit was found unsustainable and the impugned order was set aside.

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Issues: Whether the appellant was entitled to Cenvat credit on steel items such as angles, channels, HR plates, MS rounds, joists, sections, wire rope and wire mesh used in fabrication of support structures, and whether the denial of credit by relying on an overruled decision was sustainable.

Analysis: The credit dispute turned on whether the goods were inputs or capital goods under the Cenvat Credit Rules, 2004. The earlier view denying credit on structural items had been displaced by later authority, and the Tribunal applied the User Test Principle to hold that structural steel items used for fabrication of support structures for machinery are to be treated as capital goods or their components, spares and accessories. The reasoning followed the principle that equipment which is necessary for the functioning of capital goods and is used in their fabrication satisfies the statutory test for credit. Reliance on an overruled precedent was found to be judicially improper.

Conclusion: The appellant was entitled to Cenvat credit on the disputed items, and the denial of credit was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed, resulting in full relief to the appellant.

Ratio Decidendi: Structural steel items used in the fabrication of support structures for machinery qualify for Cenvat credit when they satisfy the User Test and fall within the scope of capital goods or their eligible parts under the credit rules.

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