Cenvat credit on erection structures qualifies as capital goods support, making the demand, interest and penalty unsustainable.

Cenvat credit on supporting structures and staging used for erection and installation of machinery was held admissible because the items were purchased for specific use with equipment falling under Chapter 84 and were undisputedly used in installation work. The Tribunal applied the settled principle that structural items required for smooth erection and effective functioning of machinery qualify as accessories of capital goods under Rule 2(a)(A) and Rule 2(k) of the Cenvat Credit Rules, 2004. On that basis, the demand, interest and penalty were found unsustainable, and the recipient-side classification could not be disputed in the manner adopted below.

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Issues: Whether Cenvat credit was admissible on supporting structures and staging used for erection and installation of machinery, and whether the related demand, interest and penalty could be sustained.

Analysis: The supporting materials were shown to have been purchased for specific use in relation to equipment falling under Chapter 84, and the department did not dispute their use in installation and erection of machinery. Relying on the settled position that such structural items used for smooth erection and effective functioning of machinery qualify as accessories of capital goods, the Tribunal held that the credit fell within the ambit of Rule 2(a)(A) and Rule 2(k) of the Cenvat Credit Rules, 2004. The Tribunal also found that the classification at the recipient end could not be questioned in the manner adopted below and that the reasoning based on cited precedents was misplaced in the facts of the case.

Conclusion: Cenvat credit on the supporting structures and staging was admissible, and the demand, interest and penalty were not sustainable.

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