CENVAT credit on structural steel used for capital goods support remains admissible; retrospective exclusion amendment not applied.

CENVAT credit was considered admissible for MS channels, MS angles, TMT bars, HRC plates, MS plates and electrodes used to fabricate and erect capital goods and supporting structures in the factory. The settled principle applied was that steel items used as structural support for plant and machinery essential to the manufacturing process qualify for credit. The amendment to the input exclusion in Rule 2(k) of the Cenvat Credit Rules, 2004 by Notification No. 16/2009-CE(NT) was held to operate prospectively, so it could not be applied to the prior period from May 2007 to June 2009. The denial of credit on retrospective grounds was therefore unsustainable.

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Issues: Whether CENVAT credit was admissible on MS channels, MS angles, TMT bars, HRC plates, MS plates and electrodes used for fabrication and erection of capital goods in the factory, and whether the amendment to the input exclusion in Rule 2(k) of the Cenvat Credit Rules, 2004 by Notification No. 16/2009-CE(NT) dated 07.07.2009 could be applied retrospectively.

Analysis: The disputed goods were used for erection of structures and equipment supporting the assessee's manufacturing plant. The settled position applied by the Court is that steel items used as structural support for capital goods, where they are essential to the functioning of plant and machinery, fall within the eligibility for credit. The amendment introduced by Notification No. 16/2009-CE(NT) was held to operate prospectively, and therefore it could not govern the period from May 2007 to June 2009. Since the credit was examined on merits in favour of the assessee, the limitation issue was left unexamined.

Conclusion: CENVAT credit on the disputed MS structurals and allied items was admissible, and the retrospective denial based on the amended explanation was unsustainable.

Final Conclusion: The order denying credit was set aside and the assessee's appeal succeeded with consequential relief.

Ratio Decidendi: Structural steel and allied items used to fabricate and support capital goods essential to the manufacturing process are eligible for CENVAT credit, and an amendment excluding such items cannot be given retrospective effect unless the statute clearly so provides.

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