Cenvat credit on structural steel used for machinery support is determined at receipt in the factory, not later use.

Structural steel items such as MS angles, channels, plates and TMT bars used to fabricate machinery support structures were treated as eligible for Cenvat credit when received in the factory for that purpose. The Tribunal applied the user test and followed the view that the earlier Larger Bench position in Vandana Global Ltd. had been reversed, rejecting the objection that later use of the goods controlled eligibility. Credit was therefore to be determined at the time of receipt of the goods in the factory, not by subsequent deployment, and the denial of credit was set aside with consequential relief to the assessee.

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Issues: Whether Cenvat credit was admissible on MS angles, channels, plates, TMT bars and similar steel items used in the fabrication and erection of machinery and support structures for capital goods, and whether the eligibility had to be tested with reference to the date of receipt of the goods in the factory.

Analysis: The dispute turned on the applicability of the amended exclusion introduced in the Cenvat Credit regime and on the effect of the earlier Larger Bench view in Vandana Global Ltd. The Tribunal noted that the said view had been reversed by the Chhattisgarh High Court and relied on the user test applied by the Supreme Court in similar matters involving steel items used for fabrication of machinery. It held that structural steel items used for fabrication of support structures for capital goods form part of the capital goods mechanism and that credit eligibility is to be determined when the goods are received in the factory, not by their later use. On that basis, the appellant was found entitled to credit on the capital goods and inputs received for use in the factory.

Conclusion: Cenvat credit was admissible to the assessee on the disputed MS items used for fabrication and erection of machinery, and the objection based on later use or the earlier Larger Bench view was rejected.

Final Conclusion: The appeal succeeded, the denial of credit was set aside, and the assessee became entitled to the consequential relief flowing from allowance of the credit.

Ratio Decidendi: Structural steel items used in the fabrication of support structures for capital goods are eligible for Cenvat credit where the goods are received in the factory for such use, and credit eligibility must be determined on receipt of the goods rather than on subsequent use.

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