eligibility of tnvat credit on cranes and spares for cranes

[Ramakrishnan Seshadri]

Dear Sir,

We are the manufacturers of automobile parts in Irungattukottai.

We are using injection moulds for manufacturing our parts.These moulds can only  be lifted by overhead cranes  for use in the injecting machine to  manufacture  parts. The cranes were purchased locally on  charging vat. We have taken 50 percent credit treating as capital goods under tnvat.  During the sales tax assessment the department has objected that for cranes  and spares for cranes the vat is not eligible. They asked us to reverse the same and pay penalty for this.

The department is saying that as per section 2(11) capital goods definition says ' if it is  used for the purpose of manufacture,packing,processing or storing of goods in the course of business'.

As per the department the cranes is not manufacturing any  part and they  are not eligible for vat credit.

Could any body suggest whether we can take tnvat credit eligible for  cranes and spares for cranes.

Regards

S.Ramakrishan.

AI Summary

Automobile parts maker challenges TNVAT credit eligibility for cranes, citing section 2(11) and past rulings. A manufacturer of automobile parts in Irungattukottai sought advice on the eligibility of claiming TNVAT credit for cranes and their spares, which are used to lift injection moulds necessary for production. The sales tax department objected, stating cranes do not qualify as capital goods under section 2(11) since they are not directly involved in manufacturing. Responses suggested establishing a connection between crane use and manufacturing, checking the Negative List under TNVAT, and reviewing clarifications and rulings. It was noted that cranes are not considered capital goods per a 2007 ruling, and no new clarifications have been issued since.