Cenvat credit on structural steel and false flooring components allowed when used for machinery support and cable safety accessories.

MS plates, MS angles, MS channels and HR non-alloy steel plates used to fabricate structural support for machinery classifiable under Chapter 84 were held eligible for Cenvat credit, because they fell within the scope of capital goods components and goods used in the manufacture of capital goods further used in the factory under the Cenvat Credit Rules, 2002. False flooring components used as a safety support for cables were also treated as accessories to those cables and therefore qualified as capital goods. The denial of credit on both sets of items was held unsustainable, and the assessee was entitled to the claimed credit.

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Issues: (i) Whether MS plates, MS angles, MS channels and HR non-alloy steel plates used in the fabrication of structural support to machinery qualified for Cenvat credit as capital goods or inputs under the Cenvat Credit Rules, 2002; (ii) Whether false flooring components used as safety support for cables qualified for Cenvat credit as capital goods.

Issue (i): Whether MS plates, MS angles, MS channels and HR non-alloy steel plates used in the fabrication of structural support to machinery qualified for Cenvat credit as capital goods or inputs under the Cenvat Credit Rules, 2002.

Analysis: The machinery supported by the fabricated structures was classifiable under Chapter 84 of the Central Excise Tariff Act, 1985 and therefore fell within Rule 2(b)(i) of the Cenvat Credit Rules, 2002. Components of such machinery were covered by Rule 2(b)(iii). The items were used in fabrication of structural support for such machinery and were also goods used in the manufacture of capital goods further used in the factory, attracting Explanation 2 to Rule 2(g) of the Cenvat Credit Rules, 2002.

Conclusion: Credit was admissible to the assessee on these items, in favour of the assessee.

Issue (ii): Whether false flooring components used as safety support for cables qualified for Cenvat credit as capital goods.

Analysis: The false flooring components functioned as a safety provision for the underlying cables and could be treated as accessories to those cables. On that basis, they fell within the definition of capital goods under Rule 2(b)(iii) of the Cenvat Credit Rules, 2002.

Conclusion: Credit was admissible to the assessee on the false flooring components, in favour of the assessee.

Final Conclusion: The denial of Cenvat credit on the disputed items was unsustainable and the assessee was entitled to the credit claimed.

Ratio Decidendi: Goods used in fabrication of structural support to machinery covered by Chapter 84, and goods serving as accessories to such machinery or to related cables, can qualify for Cenvat credit as components or inputs when used in the manufacture of capital goods further used in the factory.

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