Cenvat credit for steel fabrication items applied when used to build machinery and integral support structures inside the factory.

Cenvat credit on MS angles, channels, beams, joists, plates and similar steel items was recognised where those items were used inside the factory to fabricate machinery, support structures and platforms. The governing approach applied the user test and the integral-part test: steel items used in fabrication of capital goods, or forming an integral part of such capital goods, qualify as eligible inputs or components/accessories for credit. The later judicial view was treated as prevailing over the earlier restrictive approach, making denial of credit unsustainable and extending relief where the credit demand and penalties rested on such use.

---

---

Issues: Whether Cenvat credit was admissible on MS angles, channels, beams, joists, plates and similar steel items used in the fabrication of machinery, support structures and platforms inside the factory.

Analysis: The disputed items were used within the factory in fabrication of capital goods and supporting structures for plant and machinery. The governing approach, as applied in the cited precedents, is that steel items used in such fabrication are eligible either as inputs used in relation to manufacture or as components/accessories forming an integral part of the capital goods. The later judicial view displaced the earlier restrictive approach and accepted the user test and the integral-part test for Cenvat eligibility in respect of such items.

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

Final Conclusion: The credit demand and penalties could not be sustained, and the appeals succeeded with relief to the appellants.

Ratio Decidendi: Steel items used in the fabrication of capital goods or their supporting structures within the factory qualify for Cenvat credit where they satisfy the user test or form an integral part of the capital goods.

---