Cenvat credit on iron and steel used for machinery repairs and supporting structures is admissible under the manufacturing nexus test.

Credit on iron and steel items used for repair and maintenance of plant and machinery, and for fabrication of supporting structures for installation and operation of machinery, was admissible under the Cenvat Credit Rules, 2004. Goods used within the factory directly or indirectly in relation to manufacture, including foundations and supporting structures integral to machinery, qualify for credit. The earlier denial based on the overruled Vandana Global view could not be sustained, and the disallowance was held unsustainable.

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Issues: Whether credit was admissible on iron and steel items used in repair and maintenance of plant and machinery and in fabrication of supporting structures for installation and operation of machinery.

Analysis: The disputed goods were used within the factory in relation to manufacture of dutiable final products, either as inputs or as components/accessories of plant and machinery. The earlier denial based on the overruled Vandana Global view could not stand. The governing interpretation of the Cenvat Credit Rules, 2004 recognises that goods used directly or indirectly in or in relation to manufacture, including goods used for foundations or supporting structures integral to machinery, qualify for credit.

Conclusion: Credit on the disputed iron and steel items was admissible and the denial was unsustainable.

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