CENVAT credit on inputs used in the manufacture of capital goods – Board Clarifies
BOARD refers to the landmark judgement of the CESTAT in Vandana Global Ltd. V/s CCE , Raipur 2010-TIOL-624-CESTAT-DEL-LB holding that ‘capital goods' defined in the CENVAT Credit Rules, in the context of providing credit of duty paid, have to be excisable goods.
Board also draws attention to the Tribunal's judgement in the case of Vikram Cement V/s CCE , Indore (), where the Tribunal held that credit on welding electrodes used for repair and maintenance, is not available as input. It may also be noted that in the case of Vikram Cements V/s CCE , Indore - (), it has been conclusively held by the Apex Court that the definition of capital goods is not inclusive and only the items covered under the definition and used in the factory of the manufacturer can be treated as capital goods.
So Board Clarifies:-
1. Credit on capital goods is available only on items, which are excisable goods covered under the definition of ‘capital goods' under CENVAT Credit Rules, 2004 and used in the factory of the manufacturer.
2. As regards ‘inputs', they have to be covered under the definition of ‘input' under the CENVAT Credit Rules, 2004 and used in or integrally connected with the process of actual manufacture of the final product for admissibility of CENVAT credit.
3. The credit on inputs used in the manufacture of capital goods, which are further used in the factory of the manufacturer is also available, except for items like cement, angles, channels, CTD or TMT bars and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods.
4. Further, credit shall also not be admissible on inputs used for repair and maintenance of capital goods.
These important clarifications are contained in a letter to the Chief Commissioners and Commissioners – fortunately they have made it public.
Will the Board consider orders against it also as landmark orders?
CBEC F.No.267/11/2010-CX-8 Dated: July 08, 2010