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.

[Madhukar N Hiregange]

Hopefully the premises is under a permission. Therefore the eligible credits would and should be allowed.

AI Summary

Cenvat credit eligibility affirmed for input and transportation services for permitted offsite storage, subject to reversal rules. Whether a manufacturer storing inputs under a statutory permission may claim Cenvat Credit on transportation and related input services, and on inputs and input services for construction and upkeep of the permitted offsite storage; adviser states that where storage is authorised, such credits are to be treated as eligible, with reversal on inputs lying at storage forming part of the governing mechanism.