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CENVAT credit is available on inputs, input services and capital goods. Rule 2(a) of Cenvat Credit rules, 2004 defines "Capital Goods" as - "Capital goods means-

(A) The following goods, namely:-

(i) All goods falling under chapter 82, chapter 84, chapter 85 and chapter 90, heading No 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to Excise Tariff Act.

(ii) Pollution control equipment

(iii) Components, spares and accessories of the goods specified at (i) and 9ii) above

(iv) Moulds and dies, jigs and fixtures

(v) Refractories and refractory material

(vi) Tubes, pipes and fittings thereof

(vii) Storage Tank, and

(viii) Motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tippers Used -

(1) In the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or (1A) Outside the factory of the manufacturer of the final product for generation of electricity for captive use within the factory; or

(2) for providing output service

(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for-

(i) providing output service for renting of such vehicle; or

(ii) transportation of inputs and capital goods used for providing such service; or

(iii) providing an output service of courier agency.

(C) motor vehicles designed to carry passengers including their chassis registered in the name of the provider of the service, when used for providing an output service of-

(i) transportation of passengers; or

(ii) renting of such motor vehicle; of

(iii) imparting motor driving skills.

(D) components, spares and accessories of motor vehicles which are capital goods for the assesses.

It is pertinent to note that the definition of Capital goods is very exhaustive and will be including only those goods that are defined as capital goods under rule 2(a) only. Normally capital goods are identified according to the business.

However, here the meaning of capital goods in business does not sustain. In Shree Rama Multi-tech v CCE (2009) it was held that Inputs capitalized in balance sheet would not mean they will be considered as capital goods for central excise duty purpose.

CA Akash Phophalia

Chartered Accountant


Certified Indirect Taxation of ICAI


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