Cenvat credit

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2011 I am doing audit of Tiles Manufacturing Unit.They are purchasing Chain Pulley for their machines.Chain Pullies are not having longer life.They may break in manufacturing process.so they purchase it on frequent basis.

Kindly tell me,it is to be considered as Capital goods or Input for excise purpose.

U S Sharma

U S Sharma (Expert)
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19 August 2011 you can locate such items under "consumable and stores"

CA Deepak S

CA Deepak S (Expert)
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20 August 2011 As per Rule 2 of CENVAT CREDIT RULES, 2002
“capital goods” means,-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Tariff Act;
(ii) pollution control equipment
(iii) components, spares and accessories of the goods specified at (i) and (ii) above;
(iv) moulds and dies;
(v) refractories and refractory materials;
(vi) tubes and pipes and fittings thereof; and
(vii) storage tank,

used in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office;

Please note that the test is whether the items belonged to the above heads and not in relations to the account heads in which we account the same, ie, whether we are capitalising or not. Please check the chapter heading of Chain Pullies in the bill and if the same falls in the categories mentioned in the defenition it has to be treated as capital goods