Excise Duty exemption - pipes used in water treatment plants – CBEC clarifies
Full exemption from excise duty is currently available to all items of machinery including instruments, apparatus and appliances, auxiliary equipment and their components/parts required for setting up of water treatment plants in terms of Sr. No. 7 of notification No. 6/2006-CE dated 1.3.2006. This exemption covers pipes needed for delivery of water from its source to the plant (including clear treated water reservoir) and from there to the storage facility as well as pipes of outer diameter exceeding 20 cm when they are an integral part of the water supply project.
Doubts have been raised about whether the exemption pertaining to pipes applies only to pipes required for the setting up of water treatment plants or also to pipes for replacement of worn-out/damaged pipes.
The Board has given a benign clarification that “In view of the policy objective of creating the requisite infrastructure for augmenting the availability of clean, portable drinking water, it is clarified that the aforesaid exemption would also apply to pipes required for replacement and not just those for initial setting up.”
Let's hope the Board gives more such clarifications!