hello all,
I slight differ from all of your opinion...
Actually there were some amendment in the cenvat redit rules in the budget 2010-11.
Dur ot which there was change in the definition of inputs.
So now the goods used for construction of building will not be eligible as input.
and the assessee is not entitled to avail cenvat credit on the goods used for construction of factory shed
For convenience i am pasting the definition of "inputs"
CENVAT CREDIT RULES.
3.1 The definition of “input” contained Rule 2 (k) is totally revised. The new definition would be as under (with effect from 01-04-2011):
”(k) “input” means–
(i) all goods used in the factory by the manufacturer of the final product; or
(ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or
(iii) all goods used for generation of electricity or steam for captive use; or
(iv) all goods used for providing any output service;
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;
(C) capital goods except when used as parts or components in the manufacture of a final
product;
(D) motor vehicles;
(E) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and
(F) any goods which have no relationship whatsoever with the manufacture of a final product.
Explanation. – For the purpose of this clause, “free warranty” means a warranty provided by the manufacturer, the value of which is included in the price of the final product and is not charged separately from the customer;‟
The earlier definition included all such goods which are directly or indirectly in relation to the manufacture of the final products used were deemed as ‘input’ materials and credit was allowed. Now this is removed.
This revised definition would allow credit on all input materials which are used in the factory by the manufacturer of final products. It is clear that it excludes those which are specified in the definition and all such goods which do not have any relationship to the manufacture of final products/output service provider.
Further, any goods including accessories cleared alongwith the final product i.e, mandatory spares and goods used for providing ‘warranty replacements’ have also been included in the above revised definition and there is no necessity to reverse the cenvat credit availed.
Any goods used for generation of electricity or steam for captive consumption also included in the term ‘input’.
But any goods used for the construction of a building or a civil structure or laying of foundation or making of structure for support of any capital goods have been denied to be eligible as input.
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