CENVAT credit on steel items used for machinery foundations and installation accepted as integral to manufacture.

CENVAT credit on M.S. plates, bars, angles, tors, channels and sheets used for foundation and installation work was treated as admissible where the items were employed in the factory in connection with erection of plant and machinery. The Tribunal applied the reasoning in Mangalam Cement Ltd. and Vandana Global Ltd., holding that steel items used to lay foundations or support machinery can qualify as inputs or capital goods for CENVAT purposes when they form an integral part of the machinery used in manufacture. The disallowance of credit was therefore set aside.

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Issues: Whether CENVAT credit was admissible on M.S. plates, bars, angles, tors, channels and sheets used for installation and foundation work, though such items were not covered within the definition of capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004.

Analysis: The dispute concerned steel items used in the factory for laying foundations and supporting machinery. Relying on the larger Bench ruling in Mangalam Cement Ltd. and the decision of the High Court in Vandana Global Ltd., the Tribunal accepted that goods used for erection of foundations and installation of plant and machinery may qualify for credit where they are used in relation to manufacture and form an integral part of the capital goods. The reasoning proceeded on the basis that such items can fall within the scope of inputs or capital goods for CENVAT purposes when used in the factory in connection with manufacture.

Conclusion: CENVAT credit on the disputed iron and steel items was held admissible, and the disallowance was set aside.

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