Cenvat cr

Cenvat input service for General insurence on commercial motor vehical like truck lorry is allowable or not for payment of excise. The excise audit team has disallowed it during auditing on the ground that it is allowable only to motor manufecturing unit. Dear expert pl comment.
Replies (5)

@ Ashok

 

Cenvat credit on general insurance is available for those units (be it manufacturer or service provider) for whom Motor Vehicles are "Capital Goods".

 

So if it is a "capital goods" for your facotry then it shall be allowed to you.Motor manufacturing units are just falling within the provisos to the definition of capital goods.(Yes, excise audit team is wrong on that footing!).So just make sure that as per the definition of capital goods, you fulfill the requirements.

Thanks We are not motor manufecturing units . We use motor lorry for carring raw materils and other works of factory. In this case can we take input service cenvat cr paid on general insurance of motor?

@ Ashok

On a close examination of your statement of the type of vehicle you use, I came across the following:

For you the "Manufacturer", Capital Goods as per Rule 2a of Cenvat Credit Rules would include Motor Vehicles of the following type:

 

Special Purpose Vehicles, Spraying Lorry, Dumpers, Tippers, Preassure Lift, Crane etc.

 

The rule specifically excludes Motor Vehicles under heading No.8704 that is "transportation of goods".Thus your lorry for carrying inputs only is excluded from the definition of Capital Goods.

 

Hence you are not eligible for Cenvat Credit of Service Tax paid on insurance.

@ Ashok

 

However if you have any special purpose vehicles mentioned above like dumpers, tippers, crane etc used within the factory of the manufacturer then you would have been eligible for Cenvat Credit paid on general insurance.

 

for carrying raw materials and finish goods cenvat credit on input services is not allowable.

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