capital goods or not

[Dalia Felix]

Dear Sirs,

We are manufacturers of certain dutiable final products.

we also conduct 'trading' of certain other goods. For trading, dutiable goods are purchased, cut them using special machines and sell to outside parties.

can we take the cenvat credit on the cutting machine used? (though the process conducted with the machines do not amount to manufacture, definition of capital goods as per Rule 2 of CCR, 2004 allows credit on all machinery used in the factory)

In connection with the credit availability on Gen set, many learned experts have referred the SC judgment CCE, Coimbatore Vs Jawahar Mills Ltd 2001 (7) TMI 118 - SUPREME COURT OF INDIA

Give your comments please.

AI Summary

CENVAT Credit Denied for Cutting Machines Used in Trading Dutiable Goods; Trading Deemed Exempt Activity Under 2004 Rules. A manufacturer inquires about the eligibility for CENVAT credit on cutting machines used for trading dutiable goods, which do not involve manufacturing. The first response explains that trading is an exempted activity under CENVAT Credit Rules, 2004, and therefore, credit is not allowed for capital goods used exclusively for exempted goods. A circular from CBEC further clarifies this. The second response concurs, stating that no CENVAT credit can be claimed on the cutting machines or the goods processed by them.