CENVAT credit for steel used in fabrication of support structures is admissible when user test and records prove functional use.

CENVAT credit on steel and other items used to fabricate support structures, parts and accessories of capital goods was treated as admissible where item-wise invoices, goods receipt notes and a Chartered Engineer certificate established functional use in manufacture. The analysis applies the user test under Rule 2(k) for inputs and Rule 2(a) for capital goods, recognising that steel items used for support structures and machinery fabrication can qualify when documentary evidence links them to the fabrication process. On that basis, the denial of credit was stated to be unsustainable and the credit demand, interest and penalties were said not to survive.

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Issues: Whether cenvat credit was admissible on steel and other items used for fabrication of support structures and parts of capital goods, and whether the Chartered Engineer certificate and supporting records established such use.

Analysis: The appellant furnished item-wise particulars, purchase documents, invoices, goods receipt notes and a Chartered Engineer certificate showing that the disputed items were used in fabrication of capital goods, parts, components and accessories. The items were treated as inputs for fabrication of various capital goods within the meaning of Rule 2(k) of the CENVAT Credit Rules, 2004, and also fell within the concept of capital goods under Rule 2(a) of the CENVAT Credit Rules, 2004 when applied to the fabrication of support structures. The cited precedent consistently applied the user test and recognised that steel items used for support structures and machinery fabrication qualify for credit.

Conclusion: Cenvat credit on the disputed items was admissible, and the denial of credit was unsustainable.

Final Conclusion: The appeals succeeded and the credit demand, interest and penalties did not survive.

Ratio Decidendi: Items used in the fabrication of support structures, parts or accessories of capital goods are eligible for cenvat credit when the user test and documentary evidence establish their functional use in the manufacture of finished goods.

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