CENVAT credit is admissible on steel used to fabricate machinery spares, accessories, and supporting structures.

The appellant, a sugar and molasses manufacturer, claimed CENVAT credit of ₹18,19,948 on steel materials, including MS beams, angles, channels and HR plates. Of this amount, ₹13,62,554 related to materials used to fabricate spares, parts or accessories for sugar-manufacturing machinery; ₹4,57,394 related to materials used to fabricate supporting structures for that machinery

After the appellant declined a request to reverse the credit, the department issued a show-cause notice proposing recovery with interest and an equal penalty, invoking the extended period. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld it. The appellant appealed to the Tribunal

1. Whether CENVAT credit was available on steel materials used to fabricate spares, parts or accessories for sugar-manufacturing machinery

2. Whether CENVAT credit was available on steel materials used to fabricate supporting structures for that machinery

Rule 2(a) of the CENVAT Credit Rules, 2004 includes components, spares and accessories of specified capital goods within the definition of capital goods

The Tribunal relied on the Larger Bench decision in Mangalam Cement Ltd. v. CCE, Jaipur-I, which held that accessories of capital goods—not merely components—could qualify for CENVAT credit

It distinguished Saraswati Sugar Mills v. Commissioner of Central Excise, Delhi-III, in which the Supreme Court considered MODVAT credit and steel structures, observing that the decision did not govern the CENVAT-credit issue before the Tribunal

For supporting structures, the Tribunal followed the approach of the Chhattisgarh High Court that structural items used to support machinery could fall within the definition of capital goods as components, spares or accessories

The Tribunal separated the claim into the two uses of the steel materials. For the larger portion, the materials were used to fabricate machinery spares, parts or accessories; applying Rule 2(a) and Mangalam Cement, it concluded that credit could not be denied merely because the fabricated items were accessories rather than components

For the remaining amount, it accepted that machinery requires suitable support for its functioning and that materials used to erect those supporting structures could qualify under the capital-goods definition. It therefore considered Saraswati Sugar Mills distinguishable because it concerned MODVAT credit, and followed the cited judicial approach on supporting structures