Cenvat credit of excise duty/CVD paid on goods used in providing Supply of Tangible Goods service - Service Tax - 12/2009

Cenvat credit of excise duty/CVD paid on goods used in providing Supply of Tangible Goods service Trade Notice No. 12/2009 Dated 13-3-2009 Supply of tangible goods including machinery, equipments and appliance for use, without transferring right of possession and effective control of such tangible goods is a taxable service in terms of provision of Section 65(105)(zzzzj) of the Finance Act, 1994 . In some cases, vehicles, aircrafts, vessels etc., are also supplied in the above manner and such activities also fall under the said taxable service. In this regard, a doubt has arisen whether the credit of excise duty/Additional duty of Customs (commonly known as CVD) paid on such items are available to the provider of such taxable service and if so whether such goods should be considered as 'inputs' or 'capital goods', for the purposes of the Cenvat Credit Rules, 2004. 2. The matter has been examined. It is possible that some of such goods may either fall within the definition of 'capital goods' or may not be covered under the said definition. However, as these goods are primary requirements for providing the above mentioned 'output services' for such service providers, the goods including vehicles, aircrafts, vessels etc., are in the nature of 'inputs'. It is emphasized here that this clarification is valid only when the output service is in the nature of service defined under the provisions of Section 65(105)(zzzzj) of Finance Act, 1994 and the goods in question are the tangible goods supplied during the course of providing the taxable service. 3. This may be brought to the notice of all constituent members of your trade associations. (Authority: Board's letter F. No. 137/120/2008-CX.4 dated 23-10-2008 ) [Commissioner of Central Excise, Madurai , Trade Notice No. 12/2009 Service Tax No. 4/2009, dated 13-3-2009 ]