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Issues: Whether Cenvat credit is admissible on MS channels, angles, plates, bars, HR coils and similar steel items used in erection of plant and machinery or supporting structures, and whether the demand and penalties could survive.
Analysis: The Tribunal noted that the issue had been settled by later High Court decisions holding that steel items used as structural supports for plant and machinery, or in foundations and erection of plant, form an integral part of capital goods and are eligible for Cenvat benefit under Rule 2(a) and Rule 2(k) of the Cenvat Credit Rules, 2004. It relied on the view that such items satisfy either the user test or the test of being integral to capital goods, and followed the line of decisions which had disapproved the contrary approach taken in Vandana Global. On that basis, the contrary orders of the lower authorities could not be sustained.
Conclusion: Cenvat credit on the disputed steel structural items was held admissible and the demand, interest and equal penalty were set aside in favour of the assessee.
Ratio Decidendi: Steel items used as structural supports for plant and machinery, or for foundations and erection of plant, are eligible for Cenvat credit when they form an integral part of capital goods or qualify as inputs under the Cenvat Credit Rules, 2004.
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