Cenvat credit on structural steel for machinery support is admissible when the items are functionally necessary for plant operation.

Cenvat credit on steel and allied items used to fabricate support structures and foundations for capital goods is treated as admissible where the items are functionally necessary for the plant's operation. The note applies the user test and states that such structural items may qualify as parts or components of capital goods when they are essential to machinery functioning. It also notes that denial based on an overruled Larger Bench view was inconsistent with the prevailing law, including earlier Supreme Court authority recognising credit on such items.

---

---

Issues: Whether cenvat credit was admissible on steel and allied items used for fabrication of support structures and foundation for capital goods.

Analysis: The credit was denied below on the basis of an overruled Larger Bench view. The governing principle applied was the user test, under which structural items used to fabricate support structures for machinery can qualify as parts or components of capital goods when they are essential for the functioning of the plant. The decision also relied on the settled position that such credit had been allowed in earlier Supreme Court authority and that the lower appellate authority ought to have followed the prevailing law rather than the overruled precedent.

Conclusion: The disputed items were eligible for cenvat credit and the denial of credit was unsustainable.

Final Conclusion: The appeal succeeded and the impugned order was set aside, resulting in allowance of the assessee's claim for cenvat credit.

Ratio Decidendi: Structural steel and similar items used to fabricate support structures for machinery may qualify as capital goods or their components under the user test and are eligible for credit when they are functionally necessary for the operation of the plant.

---