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

Input tax credit eligibility for cranes questioned; departmental ruling treats cranes as non-capital goods, affecting credit claims.
Eligibility for TNVAT input tax credit on overhead cranes and spare parts depends on whether they qualify as capital goods used in manufacture; the department treated cranes as not qualifying and disallowed credit, citing the capital goods definition, while commentators advised establishing factual nexus to production, reviewing the TNVAT negative list and existing departmental clarifications and advance rulings.