cenvat credit, Central Excise

[SHARMA NARAYAN]

Dear sir,

Can we take cenvat credit on Reinforcement Steel which is used in for preparion of Stack (Chimni) we can not take credit on cement i am sure about that but what about reinforcement steel & structure steel use for structure and plant and machinery.

Posts / Replies

[Rajagopalan Ranganathan]

Sir,

Rule 2 (k) of Cenvat Credit Rules, 2004 excludes from the definition of 'inputs' 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 section 66E of the Act.

Services listed under Section 66 E (b) of Finance Act, 1994 are " construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority.

Therefore in my opinion you are not eligible to take credit of duty paid on reinforcement steel & structure steel

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. But i would like to state that the steel being a integral part of chimney and chimney is essential as per factory act. The chimney is a capital goods and therefore the steel is also to be considered as capital goods and hence credit should be allowed.

In view of the above I would like to appeal that if the amount of credit is substantial then a reference of case law should be taken.

[Ganeshan Kalyani]

Refer, Honble Supreme Courts decision in the case of Commissioner Vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where the Apex court allows CENVAT credit on steel items (Plates and M.S. Chennels) keeping in view of the user test.

[MARIAPPAN GOVINDARAJAN]

I agree with the views of Shri Ranganathan