Availment of Cenvat Credit on input services and inputs

[VINOD KUMAR]

Dear Experts,

Warm greetings to all.

Please do reply the below mentioned query:-

Xyz Ltd. (A manufacturer) has been granted permission under Rule 8 of the CCR 2004 to store the Cenvatable inputs outside the factory premises in a storage place which is situated nearly 10 Kms. away from their factory. The manufacturer first receives the inputs in the factory and then sends the same to the storage place under the cover of challans and by reversing the Cenvat Credit attributable to these inputs. They take the Cenvat Credit again when these inputs are received back in the factory from the storage place. They are also getting a shed constructed in this storage place and also availing the services of Security guard and accountant. My queries are:-

1. Is the manufacturer eligible to avail Cenvat Credit on GTA and other services used during the transportation of inputs from the factory to storage place and vice versa.

2. Is the manufacturer eligible to avail Cenvat Credit on inputs and input services used in relation to the construction of this shed and Security/manpower services being received at the storage place (The inputs are pipes of chapter 73 of CETA and are not perishable/deterioratable in rain).

3. If the manufacturer has reversed 1.25 Crores on account of inputs lying at storage place. He should only be eligible to avail the Cenvat Credit of only Rs.. 1.25 Crore as no activity is being carried out in the storage place except storage. Is it correct. Then, availment of Cenvat Credit on input services should result in undue benefit. Am I correct or not. Please reply with relevant statutory provisions.

AI Summary

Manufacturing Firm Queries Cenvat Credit Eligibility for Transport and Construction Services at Offsite Storage, Limits on Credit Amount A manufacturing company has permission to store Cenvatable inputs outside its factory, 10 kilometers away. The company initially receives inputs at the factory and then transfers them to the storage site, reversing Cenvat Credit during the transfer and reclaiming it upon return. The company queries whether it can avail Cenvat Credit on transportation services and construction-related inputs and services at the storage site. They also question if reversing Rs. 1.25 crore for inputs at storage limits their credit eligibility to that amount. A response suggests that credits should be allowed if permissions are in place.