Cenvat credit on steel items and welding electrodes used in fabrication was upheld as manufacturing input credit.

Cenvat credit is admissible on steel structural items and welding electrodes used for fabrication of capital goods and their parts and accessories in the factory. The Tribunal applied the user test and treated the items as being used in manufacture, not as materials for civil construction, noting that credit had already been accepted in the assessee's own earlier cases. The denial of credit was therefore unsustainable, and the settled approach was followed to maintain consistency in tax administration.

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Issues: Whether Cenvat credit was admissible on steel items and welding electrodes used for fabrication of capital goods and their parts and accessories.

Analysis: The dispute concerned steel structural items and welding electrodes used in the factory for fabrication of capital goods and components/accessories used in manufacturing the final product. The credit had earlier been accepted in the assessee's own case for similar periods, and the Tribunal applied the same settled approach to maintain certainty and consistency in tax administration. The denial rested on a presumption of civil construction use, but the evidence and prior decisions showed the items were used in fabrication activity connected with manufacture. The user test was applied and the credit was treated as part of the beneficial Cenvat scheme.

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

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