Cenvat credit on steel items used to support capital goods remained available before the 2009 amendment.

Steel plates, channels, angles and similar allied goods used to fabricate structures supporting capital goods, or to modify and support plant and machinery, remained eligible as Cenvat inputs for the pre-07.07.2009 period. The unamended Rule 2(k) of the Cenvat Credit Rules, 2004 was applied to the 2004-05 and 2005-06 assessment years, and the later exclusion inserted by amendment was treated as prospective only, not a retrospective bar. The 2012 circulars were considered relevant to the changed statutory position and not to the disputed period. The decision in Bajaj Hindustan Ltd. was distinguished because it turned on failure to prove actual use of the items. Credit was therefore upheld.

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Issues: Whether Cenvat credit was admissible on steel and allied items used as structural support for capital goods or for modification and support of plant and machinery during the period prior to the amendment of Rule 2(k) of the Cenvat Credit Rules, 2004 on 07.07.2009, and whether the subsequent circulars and the decision in Bajaj Hindustan Ltd. led the result.

Analysis: The relevant period was 2004-05 and 2005-06. Under the unamended Rule 2(k) of the Cenvat Credit Rules, 2004, inputs included goods used in the manufacture of capital goods which were further used in the factory of the manufacturer. The exclusion inserted on 07.07.2009 was treated as a later amendment and not as a retrospective bar for the earlier period. The Court relied on the line of authority holding that steel plates, channels, angles and similar items used to fabricate structures supporting capital goods or plant and machinery are eligible for credit when they serve the manufacturing process. The circulars issued in 2012 were held to operate in the changed statutory context and not to govern the period in dispute. Bajaj Hindustan Ltd. was found inapplicable because that case turned on failure to prove actual use of the items.

Conclusion: Cenvat credit on the disputed items was admissible for the relevant period, and the assessee's claim was upheld.

Final Conclusion: The appeal was found to be without merit because the tribunal's view that the assessee was entitled to credit on items used as structural support for capital goods was sustained.

Ratio Decidendi: For the pre-amendment period, steel and allied goods used to fabricate or support capital goods in the factory remained eligible as inputs for Cenvat credit, and a later exclusionary amendment cannot be applied retrospectively unless the statute clearly so provides.

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