CENVAT credit on structural steel for machinery fabrication allowed as Rule 2(k) exclusion held prospective only.

CENVAT credit on structural steel used to fabricate plant, machinery and supporting structures was treated as admissible because the goods functioned as components or parts of the machinery, and the exclusion under Rule 2(k) of the CENVAT Credit Rules, 2004 was held not to apply retrospectively. The relevant period pre-dated 07.07.2009, so the amended exclusion was applied prospectively only. On that basis, the denial of credit was found unsustainable and the assessee was held entitled to the credit, with the impugned order set aside.

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Issues: Whether CENVAT credit on structural steel items used for fabrication of plant, machinery, and supporting structures was admissible for the relevant period, and whether the amendment to Rule 2(k) of the CENVAT Credit Rules, 2004 applied retrospectively.

Analysis: The credit was denied below by treating the structural items as ineligible goods and by applying the enlarged exclusion under Rule 2(k) retrospectively. The relevant period preceded 07.07.2009, and the amendment brought in on that date was held to be prospective. The materials were used in fabrication of equipment, machinery, and their supporting structures, and were therefore treated as components or parts of such machinery. On that basis, and in light of the settled legal position relied upon by the Tribunal, the credit could not be denied.

Conclusion: The disallowance of CENVAT credit was unsustainable, and the assessee was entitled to credit.

Final Conclusion: The appeal succeeded and the impugned order was set aside, with the assessee obtaining relief on the CENVAT credit claim.

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