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Ccr ?????????

neeraj (CA) (930 Points)

30 November 2011

Will a manufacturer will get credit on following items ???????????

1 Welding electrode ?

2 Bearings

3 HR sheet

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9 Replies

satya (Executive Excise) (1839 Points)
Replied 30 November 2011

Cenvat Credit on Welding Electrodes under dispute , Hence at present it is not available, if u have availed means, when dept officers asked u have to debit "UNDER PROTEST".

Cenvat Credit on Bearings eligible under CAPITAL GOODS.

HR coils/Sheets not eligible

--------------------------------------------

please read the below definition

but excludes-

(A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;

(B) any goods used for-

(a) construction 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 any taxable service specified in sub-clauses (zn), (zzl), (zzm),

(zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act;

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 30 November 2011

Originally posted by : neeraj
	Will a manufacturer will get credit on following items ??????????? 1 Welding electrode ? 2 Bearings 3 HR sheet

if the above 3 items are used in manufacture of final products which are cleared on payment of duty, then input credit available.

Vasu S (Officer Commercial) (75 Points)
Replied 01 December 2011

used in manufacture of final products which are cleared on payment of duty, then input credit available.

it is correct.

but HR Sheet means it is a Steel item,

Steel not eligible for Cenvat credit.

read Notification no-16/2009 dated 07.07.2009

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 09 December 2011

@ vasu

any input when used in construction, will not get eligible for input credit, but HRSheet , though being steel item, is elibible for input credit, when the dutiable goods are produced with HR sheets , there is no bar to use HR sheet in producing dutiable goods,

Vasu S (Officer Commercial) (75 Points)
Replied 10 December 2011

Sir,

please refer

G.S.R. (E).- In exercise of the powers conferred by section 37 of the Central Excise

Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central

Government hereby makes the following rules further to amend the CENVAT Credit Rules,

2004, namely:-

1. (1) These rules may be called the CENVAT Credit (Amendment) Rules, 2009.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 2, in

clause (k), in Explanation 2, after the words “factory of the manufacturer”, the following shall be

inserted, namely:-

“but shall not include cement, angles, channels, Centrally Twisted Deform bar(CTD) or

Thermo Mechanically Treated bar(TMT) and other items used for construction of factory

shed, building or laying of foundation or making of structures for support of capital

goods”.

3. In the said rules, in rule 3, for sub-rule (5B), the following sub-rule shall be substituted,

namely:-

“(5B) If the value of any,

(i) input, or

(ii) capital goods before being put to use,

on which CENVAT credit has been taken is written off fully or where any provision to

write off fully has been made in the books of account, then the manufacturer or service

provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken

in respect of the said input or capital goods:

Provided that if the said input or capital goods is subsequently used in the manufacture of

final products or the provision of taxable services, the manufacturer or output service

provider, as the case may be, shall be entitled to take the credit of the amount equivalent

to the CENVAT credit paid earlier subject to the other provisions of these rules.”.

4. In the said rules, in rule 6, in sub-rule (3), for clause (i), the following clause shall be

substituted, namely:-

“(i) the manufacturer of goods shall pay an amount equal to five per cent. of value of the

exempted goods and the provider of output service shall pay an amount equal to six per

cent. of value of the exempted services; or”.

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CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 10 December 2011

Dear Mr. Vasu,

I too agree with Mr. Sharma. CENVAT credit is available on any input, whether it be HR Sheet, bearings or any other item, if used in manufacture of excisable final product. Even Steel is an eligible input, provided it is not used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods.

If we go through the above quoted Notification, "cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar(TMT) and other items” that are “used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods

Hence, cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar(TMT) and other items if used as input or used in Manufacturing Capital Goods (except its foundation & support), Cenvat Credit would we available.

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 10 December 2011

I partially agree with Sathya too. Welding Electrodes are mostly used in Construction work. It is difficult to establish whether they are used as input in manufacture of Dutiable products or in construction work. Hence Officers from department normally do not allow credit on Welding Electrode. It's upon the assessee to establish that electrodes were used as input. If that is possible credit would be allowed.

Vasu S (Officer Commercial) (75 Points)
Replied 12 December 2011

@ Gupta

Sir,

Steel used for manufacture of capital goods it is eligible ?

ex: Steel used for fabrication of preheater cyclone (for cement industry) it is eligible.

pl clarify.

I think u r also in Cement manufacturing unit ?

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 12 December 2011

Welding electrodes may qualify for cenvat cerdit if it is used for manufacture of capital goods for captive use. If bearing is used as spare of capital goods, same also eligible for credit. HR sheet , purpose is not clear from the query.