CENVAT credit on structural steel used for plant erection is admissible when integral to machinery installation.

CENVAT credit was held admissible on M.S. angles, M.S. joint beams and TOR steel used to construct and erect the plant. The Court applied the settled test that goods used in relation to the manufacture or erection of plant and machinery can qualify for credit when they are integral to supporting and installing the machinery. It further held that immovability of the structural items, by itself, does not defeat credit where the plant cannot function without them. Following its earlier and binding authorities, the Court concluded that the assessee was entitled to credit and the denial was unsustainable.

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Issues: Whether CENVAT credit was admissible on M.S. Angles, M.S. Joint Beams and TOR Steel used in the construction and erection of the plant, and whether the earlier view denying credit could survive in light of the later binding decisions.

Analysis: The dispute turned on the admissibility of credit for structural steel items used in the fabrication and erection of plant and machinery. The Court followed its earlier decisions, which in turn applied the Supreme Court principle that the relevant test is the use of the goods in relation to the manufacture or erection of the plant, and that such items, when used for supporting and installing machinery, can qualify for credit. The Court also noted that immovability by itself is not a ground to deny CENVAT credit where the structural items are used for erection of machinery and the plant cannot function without them. Following the consistent line of authority, the Court held that the assessee was entitled to credit.

Conclusion: The assessee was eligible for CENVAT credit on the structural steel items used in the plant, and the denial of credit was unsustainable.

Ratio Decidendi: Structural steel and similar items used for erection or support of plant and machinery are eligible for CENVAT credit when their use is integral to the manufacturing setup, and immovability alone does not disentitle the credit.

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