CENVAT credit on fabrication goods was held admissible where items were used as parts and support structures of capital goods.

CENVAT credit was examined for HR coils, MS angles, MS channels, MS plates, MS flats, nickel screen, pugmill and chains used in a sugar factory for machinery parts, repair, maintenance and fabrication. Applying Rule 2(a) of the Cenvat Credit Rules, 2004, the text states that components, spares and accessories of capital goods, as well as goods used to fabricate support structures and connected equipment, satisfy the user test and fall within capital goods. On that basis, the credit was held admissible and the denial of credit, interest and penalty was set aside.

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Issues: Whether CENVAT credit was admissible on HR coils, MS angles, MS channels, MS plates, MS flats, nickel screen, pugmill and chains used in or as parts/components for sugar factory machinery and allied equipment, including for repair, maintenance and fabrication.

Analysis: The disputed goods were examined in the context of Rule 2(a) of the Cenvat Credit Rules, 2004, which treats components, spares and accessories of capital goods as capital goods. The items were found to have been used either as parts of machinery or for repair, maintenance, modification or fabrication of support structures and connected equipment in the sugar manufacturing process. The reasoning applied the user test and followed earlier decisions on identical goods and the assessee's own case, where structurals and allied items used for capital goods were held eligible for credit.

Conclusion: The CENVAT credit was held admissible and the denial was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded, and the disallowance of credit, interest and penalty did not survive.

Ratio Decidendi: Goods used as components, spares, accessories or for fabrication of support structures of capital goods satisfy the user test and fall within capital goods under Rule 2(a) of the Cenvat Credit Rules, 2004, making the credit admissible.

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