TMI BlogCENVAT credit eligibility on Steel plates used to repair work of Storage TanksX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear experts We are manufacturer of chemicals. to Store the finished goods and raw material we have storage tanks. these storage tanks need time to time repair and maintenance work since our finished goods and raw material of highly hazardous in nature. mainly we need steel plates (Chapter 72) for repair work ( patch work). After going through definition this item is not covered under capital goods definition. further this item is also excluded from input definition My query is: Is CENVAT credit available in input ? (without any litigation) - Reply By KASTURI SETHI - The Reply = Storage tank is eligible for cenvat credit as capital goods under Rule 2(a) (vii) of Cenvat Credit Rules . Storage Tank conform to the definition of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital Goods. ( also see Notification No.18/12-CE(NT) dated 17.3.12 effective from 1.4.2012.) Storage tank does not qualify as input for the purpose of availment of cenvat credit under Rule 2(k) . Any doubt, post another query through TMI. - Reply By Ganeshan Kalyani - The Reply = I understand from the query that steel plate which is required for repair work whether cenvat credit is available on that. In my view the credit is allowed but only on justification that the storage tank is utmost required and in order to upkeep the tank repair work has to be carried out and for the same steel plate is required. As like spare parts is eligible for credit which forms vital part for capital assets like wise the justification will back y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou to take credit on steel plates required for repairs of storage tank. I request experts to share their views. - Reply By Yatin Bhopi - The Reply = Thanks for replay sir, My query is whether steel plates used for repair work of storage tank eligible for CENVAT credit in input . 2. Definitions. - In these rules, unless the context otherwise requires,- (a) capital goods means:- (A) the following goods, namely:- [3] (i) all goods falling under Chapter 82 , Chapter 84 , Chapter 85 , Chapter 90 , heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and access ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; 16 [***] (vii) 17 [storage tank and] I agree that CENVAT credit in capital goods is not available. Because even though if we talk about spare and accessories part, it includes only spares and accessories of goods specified at (i) and (ii). It will not cover (iv) to (vii). In input definition it includes all goods used in the factory by the manufacturer of the final product [(k) input means (i) all goods used in the factory by the manufacturer of the final product; or (ii) any goods including accessories, cleared along with the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (iii) all goods used for generation of electricity or steam for captive use; or (iv) all goods used for providing any output service; but excludes- (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; 25 [ (B) any goods used for - (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 66E of the Act; ] (C) capital goods except when used as parts or components in the manufacture of a final product; (D) motor vehicles; (E) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and (F) any goods which have no relationship whatsoever with the manufacture of a final product. Please share your views - Reply By KASTURI SETHI - The Reply = I fully agree with the views of Sh.Ganeshan Kalyani, Sir. - Reply By MARIAPPAN GOVINDARAJAN - The Reply = As told by experts CENVAT credit is eligible. - Reply By MUKUND THAKKAR - The Reply = Dear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yatin, According to my view you are not eligalbe to take credit of steel plate. becuse plate is not nature by of any componets for capital goods. as per capital goods defination. if we are talking about Inputs are able to estabilished that this is a input ? The uses of steel plate is cover the tank either the inside or out side nothing more. - Reply By Ganeshan Kalyani - The Reply = In Kisan Sahakari Chini Mills Ltd Vs. Commissioner of Central Excise, Lucknow, CESTAT held that for an eligibility of Cenvat Credit the nexus has to be determined on the basis of criteria as to whether the activity is commercially essential for manufacture of final product. If the ratio is applied in present case then the repair work for storage tank i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very much essential to maintain it and without carrying out such repair it will badly affect the manufaturer as losses will be there. Thus the credit should be rightly allowed. - Reply By KASTURI SETHI - The Reply = I again agree with the views of Sh.Ganeshan Kalyani, Sir. How I agree I shall post my views today positively. - Reply By MUKUND THAKKAR - The Reply = Central Excise Instruction- F. No. 267/11/2010-CX , dated 8-7-2010 Government of India, Ministry of Finance, (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Availability of cenvat credit on inputs used in the manufacture of capital goods - Regarding. - Reply By Ganeshan Kalyani - The Reply = Elaborated reply. Thanks - Reply By K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASTURI SETHI - The Reply = 2012 (280) E.L.T. 176 (Kar.) = 2012 (9) TMI 169 - KARNATAKA HIGH COURT IN THE HIGH COURT OF KARNATAKA AT BANGALORE N. Kumar and Ravi Malimath, JJ. COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II Versus SLR STEELS LTD. C.E.A. No. 17 of 2010, decided on 10-3-2011 - Reply By KASTURI SETHI - The Reply = There have always been two fundamental conditions or parameters or requirements for availment of Cenvat Credt:- (1) Goods must be duty paid. If Capital goods, these must be used in the factory of the manufacturer and, if inputs, these must be used in or in relation to the manufacture of dutiable final product. (2) Duty must be paid on the finished goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II am of the view that in this case basic two conditions are fulfilled . All other requirements are procedural and of technical nature. Cenvat credit cannot be denied on technical or procedural lapse. There is a plethora of judgments wherein various courts have held that Cenvat credit cannot be denied on procedural or technical lapse. In this case cover of storage tank is made of steel plates. Cover is an integral part of storage tank as tank cannot operate without cover. One cannot keep the filled tank uncovered as liquid can evaporate, rain and dust can spoil the contents/liquid of storage tank. Any thing can fall in the uncovered tank. I mean to say cover made of steel plates is an integral part of storage tank. Storage tank is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital goods and then its integral parts are also capital goods. An Air Conditioner installed in the factory cannot function without compressor. Similarly ceiling fan installed in the factory cannot work without ball bearing. Admissibility of cenvat credit on component or part of the capital goods is to be determined by its nature or use or function. Hence Credit cannot be disallowed on steel plates as capital goods. Otherwise also the function/use of steel plates is such that these cannot be out of the expression, in or in relation to the manufacture of dutiable final product. Chances of litigation in both ways are bleak. - Reply By Ganeshan Kalyani - The Reply = Superb and marvellous reply. Standing ovation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to your hard work in finding this case law and explaining in lucid. Thanks. - Reply By MUKUND THAKKAR - The Reply = Thank you sir, Makes concept more clear ... Thanks.Ganeshan Kalyani also... - Reply By MARIAPPAN GOVINDARAJAN - The Reply = Thank you, Sir, - Reply By Yatin Bhopi - The Reply = Thanks a lot sir - CENVAT credit eligibility on Steel plates used to repair work of Storage Tanks - Query Started By: - Yatin Bhopi Dated:- 17-12-2015 Central Excise - Got 16 Replies - Central Excise - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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