Cenvat Credit on Capital Goods - II

[CA Akash Phophalia]

CENVAT Credit – Capital Goods II

Coverage of Capital Goods :-

Particulars	Coverage
Chapter 82	Tools, implements, cutlery, spoon and forks, of base metal; parts thereof of base metal. Note : Apart from blow lamps, portable forges, grinding wheels with frameworks, manicure or pedicure sets, and goods of heading 8209, this chapter covers only articles with a blade, working edge, working surface or other working part of : base metal; metal carbides or cermets; precious or semi-precious stones (natural, synthetic or reconstructed) on a support of base metal, metal carbide or cement; or abrasive materials on a support of base metal, provided that the articles have cutting teeth flutes, grooves, or the like of base metal which retain their identity and function after the application of abrasive.
Chapter 84	Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof.
Chapter 85	Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, parts and accessories of such articles.
Chapter 90	Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, clocks and watches; musical instruments; parts and accessories thereof.
Heading 6805	Natural or artificial abrasive powder or grain, on a base of textile material, of paper, of paperboard or of other materials, whether or not cut to shape or sewn or otherwise made up.
Heading 6804	Grinding wheels and the like or parts thereof falling under this heading.
Clause (A) (ii)	Pollution Control Equipments
Clause (A) (iii)	Components, spares and accessories of the above goods even if they do not fall in specified tariff headings.
Clause (A) (iv)	Tubes, pipes and fittings thereof.
Clause (A) (v)	Storage Tanks
Clause (A) (vi)	Motor Vehicles excluding the following – 8702- Motor vehicles for the transport of ten or more persons, including the driver. 8703- Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars 8704- Motor Vehicles for the transport of goods 8711- Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars. However, dumpers and tippers are eligible for CENVAT credit. Even components, spares and accessories of dumpers or tippers like are also eligible for CENVAT.
Specific provisions for CENVAT of Motor Vehicles
Clause B	Eligible goods – Motor vehicles designed for transportation of goods including their chassis registered in the name of the service provider. When eligible – when used for following services (i) Renting of such motor vehicle (eg Rent-a-cab); or (ii) transportation of inputs and capital goods used for providing an output service, or (iii) courier agency.
Clause C	Eligible goods – Motor vehicles designed to carry passenger including their chassis registered in the name of the service provider. When eligible – when used for following services (i) Renting of such motor vehicle (eg Rent-a-cab); or (ii) transportation of passengers, or (iii) imparting motor driving skills.
Clause D	Components, spares and parts of motor vehicles which are capital goods for the assessee.

The Capital goods are required to be used in the factory of the manufacturer of the final products. If the above stated goods are used in office then such goods will not be eligible for CENVAT credit as capital goods. However, if capital goods are used outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory then such capital goods will be eligible for CEVNAT credit.

As far as service provider is concerned the requirement is that the capital goods should be used for providing output service.

CA Akash Phophalia

Chartered Accountant

(BCOM (HONS), MCOM (FandT), CS, DISA, Certified Indirect Taxation of ICAI)

9799569294